
Class _Ji -t 8 \\ 
Book _^ 



Copyright N°. 



COPYRIGHT DEPOSIT. 



Mining Investments 

and 
How to Judge Them 



By 

Francis C. Nicholas, Ph. D. 




Published by 

The Moody Corporation 

35 Nassau Street, New York 
1907 



.-.-Ms 



LIBRARY of CONGRESS] 

Two oopics rtt*:e : -,cCi | 

NOV 29 \9Q? 

COPY B. 



%5 



Copyright, 1907, by 
THE MOODY CORPORATION 
All rights reserved 



THE MOODY-BARTON PRESS 



CONTENTS 

Chapter Page 

I. The Organization and Financial De- 
velopment of a Mining Company . . 7 
II. The Organization and Physical De- 
velopment of a Mining Company.. 17 

III. Why Mining Companies Fail 27 

IV. Success in Mining 35 

V. The Relation of Mining Stocks to the 

Properties Back of Them 41 

VI. Speculative and Investment Value of 

Mining Stocks 51 

VII. The Geology of a Successful Mine 59 

VIII. Physical Conditions Which Should Sur- 
round a Successful Equipment for 

a Mine . 69 

IX. Personal and Business Organization Re- 
quired to Attain Success in Mining. 79 
X. Inquiries Which Should be Made Before 

Accepting a Mining Venture 89 

XI. Conditions Under Which a Mining 

Proposition May be Accepted- ..... 101 
XII. Conditions Under Which a Mining 

Proposition Should be Rejected.... 109 

XIII. Investments in Dividend Paying Mining 

Stocks 117 

XIV. The Spirit of Adventure and Specula- 

tion, What Some Have Gained; 

What Others Have Lost 125 

XV. The Mining Regions of the World and 

the Opportunities They Offer 133 

XVI. The Mining Regions of the United 

States 153 

XVII. On the Trail With an Honest, Com- 
pared With the Work of a Dis- 
honest Prospector. 165 

XVIII. The Prospector and His Agent, Hon- 
est and Dishonest Work Compared. 173 
XIX. The Prospector, the Promoter, the 

Banker and the Investor 131 

XX. The Trials of a Mining Engineer 189 

XXI. The Gist of the Whole Matter 199 

Appendix. How to Calculate the Values of Min- 
ing Stocks 203 



PREFACE 

A book on mining stock valuations may not 
be scientific, yet it can fill a useful place. 
Science should, and does have for its principal 
object the attainment of information and data 
leading to utilities; and while this little book 
cannot claim the distinction which would be 
accorded to a learned treatise on the scientific 
aspect of mining, yet it does contain, the 
author hopes, worthy information which will 
be of practical use, — resulting, perhaps, in a 
better understanding of what mining stocks 
really represent and the explanations which 
may be entertained in regard to them. 

The Author 



The Organization and Financial Develop- 
ment of a Mining Company 

If one who casually buys a mining stock, be- 
lieving, so he says, that he is "stuck," yet 
hoping that the reports may prove true, could 
know all the struggle, pathos, hopes, despair 
and moments of triumph attending the effort 
for the financial development of a mining en- 
terprise; one would sympathize with the pro- 
moter, and wonder at the determination, which, 
if success is to be obtained, must meet and 
overcome prejudices, must encounter doubts, 
and incredulous disbelief during years of effort 
to find success in beating down all barriers, 
and obtaining the necessary capital to operate 
the mine. One who is strong enough to obtain 
his end against such opposition is calculated 
to succeed, and usually does make a success of 
his mine after obtaining the money to operate 
it. There is pathos and sorrow in the effort 
because all do not succeed, even though a life 
time is dedicated to the effort. One instance 
comes to my memory. A miner prospecting 
7 



8 MINING INVESTMENTS 

some years ago discovered a mine, and thought 
it a good one; obtained the title and set to 
work to raise the money for its equipment, but 
without success. The mine was in Central 
America, a place not too well esteemed, and 
few would listen to his story. Yet he labored 
on, he and his wife together. Sometimes they 
made a little money at one work or another, 
and then would spend it looking for someone 
who would hear their story, and advance the 
capital required to work the mine. Time went 
by, they grew old together and died in want, 
and the mine was never worked. What pathos 
of hopes and disappointments were hidden in 
these wasted lives none knew, nor is this an 
isolated example. Many are waiting, working 
and hoping today; some will succeed, others 
are doomed to disappointment; but they will 
struggle on, for the mining spirit, like the 
gambling fever, is hard to subdue; and it is 
all so plain to those who own the mines, and 
feel sure as to their worth, that it seems im- 
possible that someone will not harken, and 
take a venture with them, where they them- 
selves have risked their all; and yet how 
little encouragement is found. If this were 
different, and if people who had money to in- 
vest gave better heed to those who actually 
own a mine* and sought for capital to estab- 



AND HOW TO JUDGE THEM 9 

lish works which they would themselves oper- 
ate, the story of mining would be very differ- 
ent and many permanent successes would be 
chronicled each year; but people doubt the 
miner, who with blunt story and rough ways 
seeks for financial help, and asks for partners 
to share in his venture. So the mining company 
and its financial development comes on the 
scene. The mine owner, weary in his search, 
receives offers that a promoter, banker, broker, 
or other personage will take up his proposition, 
provided suitable terms are arranged. I re- 
member well how one old prospector replied 
to such a proposition. "She's a good prospect, 
but she ain't worth no million dollars; may 
be when .she's opened up, but that's not 
now." "Precisely," the promoter said; "we 
capitalize the prospective, not the present 
worth and then sell shares based on the pres- 
ent worth at low prices which advance as 
values are developed; those who put their 
money out for development thus reap the bene- 
fit, and this is what I propose." "Each person 
who invests at prospect prices in a capitaliza- 
tion for prospective worth knows that if our 
expectations are brought to realization his 
profit will be in holding a great number of our 
shares." So the prospect was capitalized for 
$1,000,000. 



10 MINING INVESTMENTS 

This was the first step in the financial de- 
velopment of the mine. When a proposition 
is put forward on this basis and is honestly 
managed, the proposition is fair, but unfortu- 
nately the offering is not always justly man- 
aged and a greater value is placed on the pres- 
ent worth than conditions warrant; and here 
is the first influence which makes for loss in 
mining stocks. Capitalization for prospective 
worth, but the price representing the present 
worth, the money asked for the shares, is often 
more than actual present worth will warrant. 

If a prospect is worth $10,000 and the com- 
pany owning the prospect is capitalized for 
$1,000,000 then the present actual worth of 
shares is 1 % ; and if, as usual, the par value of 
the shares is $1.00 then the actual worth is just 
one cent a share, and on such a basis, and at 
such a price would be well worth buying; but 
this investment would be in nothing more than 
a prospect, and except the shareholders or 
partners, for such they really are, spend some- 
thing on the mine to open it for operation ; and 
then provide machinery to treat the ore, it will 
remain a prospect worth just one cent a share 
and nothing more. This is not good business, 
and one goes at hazard in a mine to make a 
profit, not to hoard money, so funds must be 
provided to operate and work; and this brings 



AND HOW TO JUDGE THEM 11 

forward the next step in the financial develop- 
ment of a mining company. 

The miner being asked as to the division of 
the shares naturally replies that being partners 
he and the promoter should divide, but this is 
not a satisfactory basis for those proposing to 
promote the scheme: explanation is made 
that in order to raise money shares must be 
sold, and that some must be donated to the 
treasury for purposes of development; so after 
much discussion it is generally agreed that of 
the shares, one-third shall go to the owner, 
the promoters take a third, and one-third 
is placed in the treasury; the old miner, 
doubtful as to what he had done takes his 
paper, yields his titles to the company, and 
goes back to the mine; the promoters under- 
taking to produce funds by selling treasury 
stock to keep him at work. 

This is now the situation, a prospect worth 
in cash $10,000 has been capitalized at $1,000,- 
000, and one-third of the shares must provide 
all the money for operation and development. 
In ordinary business a person contributing the 
total capital might be contented with one-third 
the profits, but would probably ask more and 
would control whatever property the business 
owned. In mining similar arrangements 
should be made, and they who contribute capi- 



12 MINING INVESTMENTS 

tal should not only be preferred in shares and 
dividends, but should be given actual liens upon 
the property to make their preferences secure. 
This is not often done because it is of little ad- 
vantage to promoters, and the offerings are of 
shares alone, usually appearing with glowing 
prospects, and the statement that so many 
shares are in the treasury to be sold at a low 
price, probably twenty-five cents a share. 
Frequently the announcement is made with 
great show of virtue that no officer receives 
compensation for his work, a suspicious cir- 
cumstance, because men cannot afford to work 
for nothing, and do not work for nothing even 
in a mine. It is a better proposition when those 
who promote state exactly what they have as 
profit, and better yet when a mining company 
pays its officials and obtains men competent to 
do successfully the work required of them. 

There seems a tendency among mining pro- 
moters to pose as philanthropists, who work 
for nothing, and with the mining proposition 
under discussion the usual offerings appear; 
the miner has gone back to his mine now in- 
corporated, and obedient to instructions writes 
glowing letters, his own enthusiasm develop- 
ing more and more. What he writes is 
quoted, and the shares begin to sell, not very 
freely, because they never do; and the pro- 



AND HOW TO JUDGE THEM 13 

moters, in order that sales might be made in 
greater volume, offer large commissions, incur 
expenses and offer special terms, so that in the 
end often not more than one-third of the money 
realized for shares goes to operate the mine; 
and this small proportion has to do the work in 
which all the great number of shares have 
equal participation. If of the treasury shares 
one-third are sold at twenty-five cents each, and 
one-third the money realized is put to actual 
work in mine, then the money so placed would 
represent about two and eight-tenths per cent, 
of the capitalization; this, with the one per 
cent, which the prospect was actually worth 
at the beginning makes an aggregate of three 
and eight-tenths per cent, actual value, real 
money, in the proposition, and this small per- 
centage must earn dividends for the total capi- 
talization. So if the old miner is not mistaken 
in his mine, and it does yield shipping ore from 
which a profit can be made, the mine must re- 
turn in profits nearly 200% each year on the 
money actually in the proposition in order to 
pay 6% on the capitalization. There are many 
propositions which do as well as this, but the 
rocks of disaster are never very far away; 
funds are apt to run low, leaving the enterprise 
not wrecked but stranded; and another is 



14 MINING INVESTMENTS 

added to the long list of mines owned by corpo- 
rations, but not in operation. 

The promoters were eager for very great 
profits, if the mine had paid, as they anticipated 
from the very start, all would have been well; 
but the financial development of the propo- 
sition not being on a secure foundation, nothing 
was provided for contingencies, and troubles 
appearing, the burden of the capitalization was 
too great. This is the history of most mining 
enterprises, though some succeed, even at this 
great disadvantage, and if better provision 
were made, the number of successes would be 
in favorable comparison. 

These are the usual conditions of most min- 
ing propositions though not all ; many are well 
organized, and the investor should learn to 
select those which are organized on proper 
lines, and to show what these lines of proper 
organization may be is the object of the fol- 
lowing chapters. 

It does not cost much to put forward a min- 
ing proposition, and where expenses of pro- 
motion are deducted from the treasury stock 
the promoters take but little risk; a risk which 
may not exceed the figures in the following 
calculation of expenses for bringing out a min- 
ing proposition at one million dollars capitali- 
zation. 



AND HOW TO JUDGE THEM 15 

Calculation of minimum expenses in bring- 
ing out a mining st«ck. 

Charter, in one of the cheaper states. . $25.00 

Stock book, ledger and seal 10.00 

Printing the prospectus, 1,000 copies. . 25.00 
Advertising at $25.00 per week for one 

month 100.00 

Postage and office rent (frequently desk 

room) 25.00 

Total $200.00 

One month's expenses, after which it is ex- 
pected that money will be coming in. If the 
stock sells the promoters make a big profit, 
and the mine is operated; if the stock does 
not sell the loss to the promoters is not great 
and they can try again with some new propo- 
sition. 

With such excellent prospects for a profit, 
with mine owners grown weary looking for 
partners to do actual mining, with mines and 
prospects to be had for shares in the companies 
incorporated to take them over, it is little won- 
der that mining promoters are many; yet min- 
ing pays such splendid returns that even with 
the great disadvantages attending the Ameri- 
can system of company promotions, among 
the many who buy mining stocks thousands 



15 MINING INVESTMENTS 

make handsome returns, and win fortunes out 
of such investments ; and the desirable position 
for an investor is to learn how to discrimin- 
ate and select the good from the bad; because 
there are desirable mining propositions brought 
forward constantly, and money is to be made 
if only one uses good judgment in selecting. 

These statements are not idle words. It is a 
too frequent occurrence in the financial de- 
velopment of a mining company that of the 
money subscribed an adequate proportion does 
not go into the property, and the shares sold 
for cash are far in the minority, a basis not 
calculated to be of advantage to those who in- 
vest; and one should look well to this point 
before purchasing. It is like having too many 
partners Who have not contributed any cash 
to the business, and if such a proposition is 
offered the investor should demand that the 
mine be pledged as security for the money 
actually contributed. 

When it is found that a proposition is not 
over-burdened with promoters' shares in its 
financial development, or that those who are 
promoting the enterprise are giving full value 
for what they reserve for themselves in shares, 
then the financial proposition is on a fair basis 
and can so far be considered favorably. 



II 



The Organization and Physical Develop- 
ment of a Mine 

It takes money to work a mine, it takes 
money for the equipment; but those who 
manage a mine, and yet are not accustomed to 
the business think that no impediment stands 
against the easy money they expect to win. 
Take out the ore and remit the proceeds, write 
the directors; this is the sense of the meeting, 
and the puzzled miner looks at his instructions 
and sends some practical suggestions as to the 
best methods for opening up the mine, and the 
machinery which will probably be required. 
The directors hold a meeting and generally re- 
solve with great show of wisdom to send ma- 
chinery without delay, effort is made to raise 
more money through the sale of stock, or if 
money is in the treasury it is at once appropri- 
ated; people who have machinery to sell are 
called in consultation; and the next thing an 
equipment is sent out to the puzzled miner, 
and word goes too that it must be placed in po- 
sition, without delay, and returns sent in. It 

17 



18 MINING INVESTMENTS 

is returns, money coming in, that the directors 
want to see; the stockholders expect dividends, 
hurried calls are sent to the manager ; but all in 
vain, such is not the way to operate a mine, 
failure almost certainly comes to oppress, 
and once a mining company has failed there is 
poor chance of re-establishing the enterprise. 
That disaster follows too hasty effort at results 
is because, before the character of the ore is 
known, before its proper treatment has been 
ascertained, and often times before the mine is 
even opened, machinery has been bought and 
shipped; the directors expecting it will fit re- 
quirements, and hazarding the money on a 
guess are generally obliged to meet, and to ex- 
plain the disappointments; because machinery 
bought in this haphazard way can hardly be 
expected to give good results. 

An incident of such work as this can be 
found in numerous mines. One which has for 
some years past been prominently before the 
public is a good example. It was a prospect, 
and as such had merit, but neither the charac- 
ter of the ore, the amounts to be obtained or 
the physical requirements had been well es- 
tablished ; yet beneath the magic touch of capi- 
tal great undertakings were commenced, men 
swarmed about the property, shafts were sunk, 
electric plants gave light in all the galleries 



AND HOW TO JUDGE THEM 19 

under ground, mills were in process of erec- 
tion, houses, railway sidings, everything which 
engineering, directed by those who had ma- 
chinery to sell, could devise was being done; 
and after thousands had been spent it de- 
veloped that the machinery was not suited to 
the ore, then other plans were tried; new 
equipment recommended by those who had 
machinery to sell was purchased. Three times 
were failures the sole reward for thousands 
spent, and the mine was brought to such an 
ill repute that where a good result might easily 
have been attained, were debts, a property in- 
volved, machinery of little use; and all just 
struggling to be maintained. Then one of the 
directors, prominent in business life, admitted 
that he was a fool, that is, when it came to min- 
ing propositions; and so he was, and so are 
most men who, as directors of mining enter- 
prises, force the issue, seek quick returns and 
vote to build and establish equipment before 
the mine is opened. Luck may be with them, 
and by chance the equipment may be suited to 
the requirements of the ore, but usually luck 
leads a man astray, and when an investor hears 
of rapid work of equipment and development 
going hand in hand, it will be safe to let such 
propositions go to others ; for where good min- 
ing practice is not well maintained the chances 



20 MINING INVESTMENTS 

of success are very poor. Naturally one may 
inquire, what is good mining practice? This 
question does not admit of easy answer, for 
no two mines are found the same, and what is 
good practice in one would probably lead 
to disaster in another. Yet certain general 
principles can be considered as bearing on the 
question, and these being understood the en- 
quirer can form an opinion as to whether the 
organization and physical development of the 
mine is proceeding as it should. 

Mines may be divided into three classes. 

First, those which produce ores very high 
in value, with every ounce of ore worth care- 
ful handling. 

Second, those yielding rich ores and by their 
indications promising supplies of mineral 
which can be milled to certain profit. 

Third, mines which yield a low grade of ore 
from which a profit can be had, if the product 
can be treated to advantage. 

Then there is another class of mining propo- 
sitions, prospects, indicating that by opening 
up the ground mineral-bearing deposits will 
be found. 

Each class of mines requires different treat- 
ment. Those which yield such rich ores 
that every ounce is worth careful handling 
are rare and the best practice is to take the 



AND HOW TO JUDGE THEM 21 

course usually recommended by boards of di- 
rectors not skilled in mining and get ore, not 
with such eagerness, however, that mining 
operations are so conducted that future work 
must be more and more expensive ; but get ore 
without too much regard for future operations, 
because such mines usually do not last long; 
and though some do continue to great depth it 
may be taken as a rule, to which there are some 
exceptions, that very rich mines do not last so 
long as others, and the best practice is to make 
a drive for all that can be had in values with- 
out great equipment. When such a proposition 
is presented it is fair to take a chance on it, if 
the capitalization is not high ; but where a rich 
ore is reported running into the hundreds or 
even thousands to the ton and a great equip- 
ment is proposed, that proposition is safe to 
let alone, because the chances are that the ore 
obtained will not be worth the cost of the 
equipment. Of course, there are exceptions, 
but chance rules in mines and the chances are 
that a very rich mine cannot be a big mine and 
therefore a big equipment will be out of place. 
The second class, those mines which yield 
good ores, require very different treatment, 
and from the viewpoint of a stockholder, the 
following steps should be taken as good min- 
ing practice. 



22 MINING INVESTMENTS 

At the beginning of the proposition, while 
the mine is still an undeveloped prospect, the 
shares should be sold at a low rate, and the 
money obtained applied to work of develop- 
ment; not to the purchase of machinery or to 
arrangements for selling ore, but to develop- 
ment work and nothing else. The shares should 
advance in price as this work progresses, and 
the presence of ore bodies is established and 
ore reserves are blocked out; that is, opened 
by first sinking down a shaft near the vein, and 
at a certain depth cross-cutting by digging a 
tunnel from the bottom of the shaft to where 
the vein should be; and then finding the vein 
as expected, drifting, that is, tunneling along 
it; then an assured expectation can be enter- 
tained that the vein found on the surface and 
encountered again by tunneling from the bot- 
tom of the shaft extends from the surface down 
to where it has been encountered, all ore, a 
body opened up and ready to be taken out. 
This practice may be varied, but the principle 
is the same, the operations should be to prove 
up a large body of ore before going to the ex- 
pense of erecting machinery. Sometimes the 
mine is so formed that the shaft can be run 
directly on the vein itself, a very satisfactory 
method of proving ore when it can be done to 
advantage; but usually the shaft is placed near 



AND HOW TO JUDGE THEM 23 

the vein and no attempt is made at burrowing, 
that is, following the irregularities of a mineral 
formation for the sake of always working in 
the ore. This is not now well regarded, al- 
though it was the ancient practice. 

In other mines, where the mineral deposits 
are found high among the mountains, the situ- 
ation admits of tunneling to reach the vein, 
rather than sinking down a shaft beside it, but 
the principle is the same, the object being to 
open up and prove the presence of the ore from 
the top, or outcropping of the mine, to the 
jplace at depth where the vein is cut; and 
having established that an abundance of the 
ore is there, the next step is to equip the mine 
with machinery to treat the ore. Good prac- 
tice is to make careful test, and when a plan for 
treatment has been satisfactorily proven the 
plant can be purchased with assurance that 
the mine will be successfu 1 

Where a proposition is presented under con- 
ditions of operation as here outlined, it is a fair 
risk to take a chance, provided that the price is 
right. At first, before the mine is opened, the 
share should be very cheap because everything 
is risk, and if enough shares are not sold the 
mine may never be opened up at all. Then, as 
the work proceeds, there should naturally be a 
gradual advance 'in the price asked for the 



24 MINING INVESTMENTS 

shares, particularly so if proofs of mineral to be 
found at depth are brought to light; until, 
when the ore is found at depth there should be 
a material advance; and when the ore bodies 
have been drifted on, and proven as to ex- 
tent a good price should be asked for the 
shares. Finally when the equipment has 
been put in place and the mine is set to earn- 
ing dividends a high price should be asked and 
will be had, because then everybody wants the 
investment; and those who took the risk at 
first, and would have met a total loss if ore had 
not been found at depth now have their reward. 

Sometimes long periods pass in development 
work; often it is carried on too far, and 
when once a paying ore deposit is encountered, 
it should be operated, because the object of 
mining is not to develop a fine engineering 
plant, but to get ore and get it with the 
least possible expense. This being held in 
mind, it is fair to take a chance in mining 
where good prospects are reported on the 
authority of one who knows what indications 
really promise good prospects, and those in 
charge of the proposition propose good mining 
practice. 

In the third group or class of mines, where 
lower grade ores are found, good practice is 
the same as has been stated, but it must be car- 



AND HOW TO JUDGE THEM 25 

ried out with greater care, because the equip- 
ment required to make money out of low grade 
ores is very costly. Much money must be 
raised, and before such large amounts are 
risked the presence of a very great deposit of 
the ore must be established; and the mine 
opened up, and proved at several different 
points and places, to establish beyond perad- 
venture that great bodies of ore are at hand to 
supply the extensive plant which must be oper- 
ated to make money out of low grade ores. 

With mines in prospect, that is, mineral 
ground where ore deposits are expected, but 
are not certainly known to exist, all is specu- 
lation, and usually the chance is poor and safe 
to let alone. However, as sometimes strikes 
are made, and prospects worth but a few cents 
a share advance to dollar values over night, 
some people will be willing to accept the risk, 
and if the shares are cheap enough it is a fair 
gamble, nothing more; yet if the management 
is honest and their plans for exploration vigor- 
ously prosecuted, the risk can be taken, but 
only at such prices that if the mine wins out 
the profit will be manyfold the money put at 
risk. 

These general statements give but an outline 
of the different questions involved in the physi- 
cal development of a mine. Incomplete cer- 



26 MINING INVESTMENTS 

tainly, but if the proposition is looked at with 
critical analysis along the line of inquiry here 
suggested an accurate opinion can be formed 
as to whether the physical development of the 
mine is proceeding along lines which indicate 
success. 



Ill 

Why Mining Companies Fail 

The admission must be made with regret 
that most mining companies are failures, but 
while this is true of mining it is also true of all 
companies; for the records show that some 
ninety per cent, of corporations are failures, 
and go out of existence, many of them after 
only a year's existence. This being the fact it 
must be admitted that failures in mining are 
not more frequent than among ordinary corpo- 
rations; still the fact remains that most min- 
ing companies are failures, a large majority of 
them; which in the aggregate represent the 
hopes of thousands come to naught. Why this 
should be when mining is such a profitable 
business seems strange, for one would think 
that records of successes would be more pro- 
nounced, and must look with interested con- 
cern at the causes which produce such bad re- 
sults. The reasons why are many, and those 
who hold mining stocks should take heed of 
these reasons, and perhaps discern approaching 
failure in time to protect their holdings. Of 

27 



28 MINING INVESTMENTS 

the reasons why mining companies fail, one, a 
potent reason, is scarcely known. It happens 
many times that the stockholders bring about 
the ruin of their own interests, and put bur- 
dens on the efforts of those who have the en- 
terprise in charge which doom the company 
to certain failure. Rarely it happens that 
the progress of a mine is up to expecta- 
tions, delays and difficulties are almost 
sure to be encountered; and then comes criti- 
cism, and they who own the shares bewail their 
disappointment, and declare they have been 
cheated, denouncing often that the undertaking 
is a fraud, and, bringing it in ill repute, make 
further progress well nigh an impossibility; 
and the enterprise discredited becomes a dis- 
mal failure, where a good word in support of 
those who had the enterprise in charge might 
have brought about a great success. If a man- 
agement is found to be dishonest, those who 
have bought the stock should lose no time in 
taking legal action, and not be content with 
idle words of disapproval. Where a manage- 
ment is found to be just, and making due effort 
to attain success, even though disappointments 
are encountered, that management should 
have a good word now and then to help their 
efforts, and it is a poor man who speaks badly 
of that which he owns himself; if he does 



AND HOW TO JUDGE THEM 29 

so, he should not expect anything but deterior- 
ation in the values of his property. 

Here are some of the reasons why stock- 
holders become dissatisfied and criticise. Re- 
sults may not be quick enough to suit them 
for which the management is frequently de- 
nounced. It may be that some who have taken 
a chance on an unestablished mine at a low 
rate wish to sell out their holdings, and in place 
of looking for a purchaser go to the manage- 
ment demanding that the stock be immediately 
repurchased from them; forgetting that those 
who have gone in together to prove up an un- 
tried mine are in fact, if not in law, partners, 
the money which has been subscribed must 
be applied for work on the mines to benefit 
them all, and that managers who are so en- 
gaged have not the time to leave their work 
and hunt up a purchaser; then it may be that 
the mine requires all the money which the 
managers can raise, and to divert some of this 
money to repurchasing shares which holders 
may wish to sell might work serious injury to 
those who are not seeking to dispose of what 
they hold. For these reasons, while a mine 
is going through its stages of development 
those who buy should do so with the full un- 
derstanding that such shares bought at low 
prices must be held and put away till the mine 



30 MINING INVESTMENTS 

has been developed, then, of course, shares can 
be freely sold. 

This cause of failure, the denouncements of 
those who have purchased stock, is one far 
reaching cause why mining enterprises fre- 
quently end in disaster, because when once 
adverse criticism is in circulation the manage- 
ment can no longer sell shares to keep up the 
work, and then the enterprise becomes a fail- 
ure. 

Another among other many causes leading 
on to failure is that competent engineers are 
not employed. Probably no cause is more pro- 
lific in unfortunate results. A miner once said 
to me that when a man had made a failure at 
everything else he took up mining, and soon 
considered himself an expert. This is a good 
criticism, but the man who made it was him- 
self a most outrageous failure, and well illus- 
trates the criticism. He was pleasant, aggres- 
sive, a talker, knew it all and more ; persuaded 
people to place money with him and then ob- 
tained for them no results of any kind, not even 
a property held under title. Here we have a 
frequent cause for failure, and if those who 
thought of buying mining stocks would assure 
themselves that those who were to have the 
management were competent there would be 
few bad investments made in mining. 



AND HOW TO JUDGE THEM 31 

As stated in a previous chapter on over capi- 
talization where less than a due proportion of 
the stock is represented by cash, or real prop- 
erty, tends to make mining unprofitable for 
those who have invested. Frequently we hear 
that such or such a mine is making money, but 
the capitalization is so high that nothing can 
be paid in dividends; a condition which may 
continue during many years, and such a mine 
cannot be spoken of as a success. This adverse 
condition of over capitalization should be 
counterbalanced by security on the property 
itself with preferences for interest for the bene- 
fit of those who may invest money in the enter- 
prise. 

Among the causes which lead on to failure 
a form of dishonesty called "graft" in current 
slang is very potent, and hard for stockholders 
to control; perhaps it never will be held in 
check, and it is mingled with all the forms of 
dishonesty which may be practiced in a busi- 
ness such as mining while the enterprise is 
being organized where at the start untried men 
and unestablished usages are brought together, 
new equipment, new accounts, everything un- 
tried; it is small wonder that efficiency of re- 
sults are often low and that at a time when 
mistakes are apt to bring on a disaster money 
misapplied means ruin. Dishonesty is very 



32 MINING INVESTMENTS 

prone to visit all human affairs, and as yet no 
really well established form of checking up 
against it has been developed; yet in mining 
it could be done if the stockholders gave more 
attention to their own interests, and had in- 
dependent auditing committees which might 
call for reports at any time, and make actual 
physical inspections, employing competent 
engineers to give them information as to what 
the true conditions might be on a mine, then 
there would be very few losses from misappli- 
cation of the funds. Unfortunately stock- 
holders are so indifferent that there is small 
chance that auditing at sudden, and unexpected 
times will become the custom; and inefficient 
application or perhaps misappropriation of 
funds will always be a potent factor among the 
causes why a mine is not brought to success. 
To watch this condition is not easy, but where 
it is found that promised results are not ob- 
tained, and the management cannot give a 
good reason why this is so, the stockholders 
should take steps to have committees formed 
to make investigations, and if necessary place 
a new management in charge. 

Another very frequent cause for disappoint- 
ment of results is that machinery set up to do 
the work of winning values from the ore will 
not give such returns as were expected, and 



AND HOW TO JUDGE THEM 33 

frequently the enterprise must then be aban- 
doned or closed out to other people because 
lack of funds will not permit the management 
to purchase and set up other kinds of ma- 
chinery. Against this difficulty a prospective 
stockholder has poor opportunity for protec- 
tion, and can only ascertain that the plans for 
treatment of the ore were drawn up by men 
who are competent in such work, and who are 
not themselves interested in selling machinery 
on which they reap a special profit. 

To all these causes why a mine may fail 
there is the ever present possibility that the 
ore may not hold out, that its character may 
change and not be suitable for treatment with 
the machinery which has been established; but 
where the mining practice has been good the 
loss from this contingency should not be so 
very great, because, before great expense has 
been incurred for machinery with all the cost 
of setting it in place, the mine will have been 
tested, the veins and deposits proved, and then 
the heavier expenses of equipment are not such 
a risk. 

I do not call that mining enterprise a failure 
which undertakes to see what there may be in 
a likely prospect and finds inadequate supplies 
of ore. If honestly put forward to those who 
may invest, and the plain statement made that 



34 MINING INVESTMENTS 

it is on a prospect omy that the hopes are based, 
then if money is properly applied the results 
for which it was subscribed have been accom- 
plished, and any enterprise which accomplishes 
that which it has undertaken cannot be called 
a failure. In opening up a prospect the object 
had in view is to ascertain whether or not the 
indications will lead the • operators to paying 
ore, and money so lost can be considered spent 
in legitimate enterprise and efforts — and stocks 
in exploration companies have great possibili- 
ties to win most excellent returns. A disaster 
is different from a failure in mining. A disaster 
is loss. A failure in mining can be considered 
as such only when ore has been found and the 
management fails to obtain adequate returns. 
Whatever may be the miscalculation if the 
mine produces ore and does not make money 
for its stockholders that mine is a failure. 

The conditions which have been noted are 
those which principally cause disasters or fail- 
ures in a mine, and people who think of making 
an adventure of capital in a mining proposition 
should study the conditions, and take the risk 
only after favorable indications have been 
proven, or at least strangely indicated from an 
independent source of information. 



IV 

Success in Mining 

A good old saying often heard is "Nothing 
succeeds like success;" a better rendering 
would be, nothing succeeds like mining. Not 
anywhere are such profits made, nor in any 
calling are there such sudden tidings of 
good fortune. A stock selling for a few cents 
a share develops an unexpected demand, and 
presently is worth a large amount of money; 
so much that in many instances a few hundred 
dollars have returned abundantly and the for- 
tunate possessor finds sufficient income to live 
comfortably for a lifetime. Such results are 
worth a risk, and so many instances have been 
known that there is always a chance that even 
in the most discredited stocks a strike may be 
made and great returns result. It may be so 
provided that the mine is in operation, for be- 
tween the stocks of dormant mining enter- 
prises, and mines which are in operation there 
is such a difference that the same conditions 
which would be favorable in one would be ad- 
verse in the other class, and, when considering 

35 



36 MINING INVESTMENTS 

success in mining, the two classes of stocks 
must be taken as entirely different. A mine in 
operation has always a chance of an achieve- 
ment, and a great success. A mine lying dor- 
mant has no chance at all, till some arrange- 
ments have been made by which the mine may 
be put in operation, then it may attain a great 
success, or like any other mine it may drag on 
for years and come to nothing in the end. 

Success in mining for the stockholder is to 
select and make investments where profits are 
obtained, and such results develop out of care- 
ful mining practice, good management and 
honesty in operating a property of merit. In 
making his selections the investor is at some 
disadvantage, for he must take the statements 
made by others, but in forming an opinion one 
should know the elements and the conditions 
which most probably will lead on to success. 

We would all like to invest a little money, 
and have it win a competency; and it can be 
done in mining if one understands the con- 
ditions of the venture, and waits till the right 
opportunity arrives. This is an important point 
to be considered; if one would make a success 
at mining, one must wait till a real opportunity 
arrives. An opportunity does not come with 
such great frequency, and usually a good min- 
ing proposition does not have to seek very far 



AND HOW TO JUDGE THEM 37 

to obtain backers, for which reason those min- 
ing propositions seeking capital by much push- 
ing, advertising and inordinate claims for 
values must be considered as most doubtful, 
and safe to let alone. An incident will illus- 
trate the fact. An advertising writer making 
a specialty of mining literature said recently: 
"Well, for the last eight years I have been 
writing up the dope for mining propositions 
and have seen sixty or more draw good money 
from investors." Asked how many of these 
enterprises had been successful he replied that 
only one had turned out well, another might 
have given good results but the superintendent 
was dishonest to such an extent that a receiver 
was appointed and the mine closed out to 
others. 

In sixty mining propositions one only was 
successful, and how is the investor to pick the 
one when all the others, though great promises 
are made, are unsuccessful. Rules for judging 
a mining proposition will be attempted in a 
later chapter, the object had in view at present 
is to describe successful mining and the differ- 
ent stages of development which lead up to 
success. 

It is a favorable indication when the mine 
seeks capital from general investors, that those 
who have the enterprise in charge are not de- 



38 MINING INVESTMENTS 

pendent on the product of the sale of shares 
for their own livings; and more than this can 
and do risk some money for their own account, 
and where such is the case it is a fair propo- 
sition to join in with them. The first step in 
the development of a successful mine is that 
people of some responsibility are interested in 
it. Such people usually proceed with caution, 
and inform themselves before they take a risk. 
A mining proposition brought to good business 
men has been considered, and they are im- 
pressed by what is said ; usually their next step 
is to send for and obtain such local informa- 
tion touching on the property as may be avail- 
able; and these reports confirming what they 
hear, the next step is to call a competent 
geologist, who is asked to give an opinion on 
reports and samples; and he, thinking well of 
what he sees, is sent out to examine, and find- 
ing that the ore deposits promise well advises 
that the business men take up the proposition. 
Probably an agreement is now made with those 
who own the property, the business men 
take up the enterprise, and their next step is 
to send out a mining engineer, who passes on 
the proposition in its engineering features, and 
finding that the mine admits of successful oper- 
ation makes his report and recommends equip- 
ment. Before this equipment is purchased ar- 



AND HOW TO JUDGE THEM 39 

rangements are made to open up the property, 
and prove that the ore is there in quantities, 
which the geologist found indicated; and now 
a contract to a competent miner is let out. The 
business men apply business methods, and 
make contracts for their work, the same as 
would be done in any work of construction; 
they do not undertake to forward money 
for day labor to be performed in a distant place. 
The miner having the contract sets to work, 
and after a few days begins to send reports 
showing that the mine is opening as the geolo- 
gist expected, and the indications seem most 
favorable. But about this time the business 
men find that the money required makes quite 
an investment and they resolve to seek aid 
from investors. A plain statement is then 
drawn up, showing just what the values are, 
the prospects, the reports which have been 
made; not "dope" and flamboyant literature, 
but a plain concise statement of the facts and 
with it offering stock at a fair valuation. It is 
natural that an offering such as this would find 
eager buyers, and usually the acquaintances, 
associates and friends of the practical business 
men supply all the money which may be re- 
quired to meet the payments, on the contract; 
then when this contract has been carried out, 
and good bodies of ore have been proven to 



40 MINING INVESTMENTS 

exist, and, usually a mine examined and re- 
ported on favorably by a competent geologist 
and a competent mining engineer does turn out 
well, and the ore having been proved, the 
next step is to set up the machinery. An- 
other statement is prepared showing the values 
which have been proven, and subscriptions are 
asked at better prices for the stock, but prices 
based on actual values, and prety certainly the 
offering is quickly taken. Then a competent 
mining engineer is put in charge, other con- 
tracts are let, presently the machinery is 
all in place and put in operation, and it is but 
natural that a mine so managed will be suc- 
cessful and yield full returns for many years. 

Unfortunately, such good management is 
rare, and those who know so little about min- 
ing that they proceed without any caution are 
frequently in charge, and with flamboyant 
dopy literature, and glowing advertisements 
promised the immediate returns they so confi- 
dently expect, and glorious fortune easily ob- 
tained. If only such great promises Could be 
fulfilled there would be many rich; most un- 
fortunately, however, success but rarely follows 
efforts at hurried, little skilled and speculative 
mining. 



The Relation of Mining Stocks to the 
Properties Back of Them 

A question which should be among those 
most carefully considered is, what may be the 
relation of the stock offered to the property 
back of it. In other words, what does the 
stock represent? It may be a share in actual 
ownership, it may be a share in contingent 
ownership, it may be a share in prospective 
ownership, it may be a share subject to previ- 
ous liens or it may be a share with but limited 
rights. All these different conditions affect 
values, and one who buys a mining stock surely 
ought to know what it is, and what it really 
represents. 

Whatever may be the form of ownership the 
question of share divisions is very important. 
It is of small consequence what the capitaliza- 
tion may be, the important matter is how many 
shares are there? If a mine were capitalized 
for one million dollars, and there were only 
one share, that share would be a title to the 
whole property, and would be worth whatever 

41 



42 MINING INVESTMENTS 

the mine, option or contract might be worth. 
If the par value of the shares were placed at 
one hundred thousand dollars each, there 
would be ten shares in the million dollar capi- 
talization, and each share would be worth one- 
tenth of the value of the whole property. If, 
however, the shares were of one dollar each, 
as is usually the case in mining corporations, 
there would be one million shares and the 
value of each share would be one one-millionth 
of the value of the whole property. This fact 
must be carefully held in mind when one pro- 
poses to buy a mining stock. How many shares 
are there? What the capitalization may be is 
of not any importance. A mine capitalized 
with only ten dollars and only ten shares of 
one dollar each is exactly the same in ratio to 
value as a mine capitalized for one million dol- 
lars with ten shares of one hundred thousand 
dollars each. There would be ten shares in 
each instance, and whatever the mine might 
produce would be divided in ten equal parts, 
and each share would get a tenth. Similarly 
if a mine were capitalized for one hundred mil- 
lion dollars with shares of one hundred dollars 
each, and another mine were capitalized for 
one million dollars with shares of one dollar 
each, both mines would have one million 
shares, the ratios of ownership would be the 



AND HOW TO JUDGE THEM 43 

same and each share would be entitled to one 
one-millionth of the product of the property. 
From this it will be seen that the par value of 
the shares is an idle thing not to be considered. 
The question is how many shares are there? 
And it would be better if mining companies 
were incorporated with no specified par value 
and were offered to investors as so many 
shares. A mine divided among a million 
shares, a mine divided among a hundred thous- 
and shares, or a mine divided among a thous- 
and shares. The incorporation laws of the 
United States require that a par value should 
be specified, and under these conditions the 
best an investor can do is to disregard the par 
value and inquire only as to how valuable the 
mine may be and how many shares there are 
among which to divide the products of the 
property. 

This being in the mind of an investor, and 
having inquired as to what the mine may be 
worth and how many shares there may be; it 
is next in order that inquiries should be made 
as to what the shares may represent. If it is 
actual ownership the conditions are the best, 
and where a mine is so held it must be shown 
that the property has been fully transferred to 
the company, that there are no restrictions in 
the title and that the company is the owner, 



44 MINING INVESTMENTS 

free and clear, an actual estate in fee. Unless 
the mine is so held the stocks are risky propo- 
sitions, and except the prospects are far better 
than the ordinary, had best be let alone. 

Where a property is held under contingent 
ownership, the company will own the property 
in case it complies with certain conditions 
which it may or may not be able to carry out. 
A company incorporated to take a property 
under bond and lease is one instance. If it 
has the amount required the company will own 
the property, and the shares will represent 
something; but if it does not succeed in pay- 
ing the amount required, it will forfeit all its 
rights in the mine, and the shares will repre- 
sent nothing, and if an investor thinks of buy- 
ing under such conditions he should weigh 
well what the chances are that the company 
can meet the requirements; for if it does not 
the shares can never have value of any kind at 
all. 

Many of the rich mines in Spanish Ameri- 
can countries are held under concessions, not 
titles, and a concession is nothing but a con- 
tingent interest. The company is given the 
property provided that within a stated term of 
years it will complete some work of public 
utility, usually an expensive road to be con- 
structed from some part of the country to an- 



AND HOW TO JUDGE THEM 45 

other; or public buildings or other utilities may 
be specified as the work required, and in every 
case the title is contingent on the completion 
of the work. Such properties are nothing but 
contingent interests, and frequently very 
doubtful ones at that ; for those who grant the 
concessions are shrewd men, a Yankee isn't in 
it with a Spanish American when it comes to 
arranging a contract in which a sharp bargain 
is concealed, and usually those who hold the 
concession find that to fulfill the conditions 
under which the occupancy of the property has 
been granted requires an amount of money 
much greater than was expected; and if the 
conditions are not fulfilled, and the public 
works are not delivered in the time specified, 
then the shrewd Spanish American officials 
simply carry out the terms of the agreement as 
its specifications require, call on the company 
to complete its bargain; and if it fails they 
simply take back the property again with all 
the improvements which may have been placed 
upon it, and the shares of that company then 
represent nothing, not even dormant owner- 
ship. 

Thus many dangers are sure to visit the 
company holding property under a contin- 
gency, and who buys shares in such an enter- 
prise should have a care and see just what the 



46 MINING INVESTMENTS 

chances are, and how strong the company may 
be to give assurance that the title will be suc- 
cessfully completed. 

Another form of mining proposition causing 
frequent loss is one in where the shares offered 
represent prospective ownership and nothing 
more. Usually such shares are issued against a 
contract to acquire a property or an agreement 
to explore a property, and take it over if found 
satisfactory. The stocks of the exploration 
companies generally belong to this class of is- 
sue. Where property is offered with a clear 
statement of what the shares really represent 
this basis of organization is a just, legitimate 
and often a very profitable form of mining 
speculation. Frequently the true facts are not 
stated with clear precision, and the investor 
subscribing to an exploration company, or to a 
company organized to test a mine, or one in 
which there is simply a lease, is given the im- 
pression that the assets are in a stronger po- 
sition than really is the fact. As stated, how- 
ever, this is often a desirable form of mining 
speculation, but the shares should be either of 
very low price, or there should be very few of 
them. 

Frequently an exploration company is or- 
ganized with a very few shares. Perhaps ten 
men may each put a certain amount of money 



AND HOW TO JUDGE THEM 47 

in a pool, and send an expedition to explore for, 
and acquire mines, and certainly the enterprise 
is legitimate. Another form of contingent 
ownership is where indications of mineral have 
been found, and a company is formed to search 
the ground, and if found promising to acquire 
title. This too is a legitimate form of oper- 
ation, and many successful ventures have been 
made in such enterprises. Another form of 
prospective ownership is the lease where the 
company owns nothing and can only own such 
ore as it may be able to take from a property 
in a given time, less the royalties, or payments 
which must be made to the owner of the prop- 
erty, so much percentage of the value of every 
ton of ore the leaser may take out. The own- 
ership in such an organization is simply the 
prospective ore the company may succeed in 
winning from the mine. Such enterprises have 
been very profitable, but are not permanent 
except when a long lease has been obtained, in 
which event a longer life may be expected for 
the enterprise; but in any event the capitaliza- 
tion should be low, that is, there should be 
only a few shares; or if there are many the 
prices should be very cheap, and an investor 
should look to it with great attention to ascer- 
tain that the enterprise is in competent hands. 
Those companies which are organized sub- 



48 MINING INVESTMENTS 

ject to mortgages or previous liens are rarely 
to be well considered, and are often very de- 
ceptive, because a better value can be indicated 
than the facts will really warrant, and yet those 
who put the enterprise forward may keep well 
within this law; for what importance is it that 
a mortgage, or a lien for payments, should be 
on a mine such as the property the promoters 
are putting forward; a few shipments and all 
the mortgages and liens will be paid, at least 
so the promoters think and if the investor 
thinks so too he should take a chance, but a 
wise investor would make pretty thorough in- 
vestigation before placing his money at such 
a hazard. 

Companies issuing shares with limited rights 
are not so many in this country, though pref- 
erence shares are not uncommon, called usually 
in this market preferred shares; but in foreign 
companies obligations to pay out of the earn- 
ings, large proportions to founders, discoverers 
and others often burden a mine to such an ex- 
tent that the shares have very little real value ; 
especially if the preferences are in the form of 
obligations to be paid first before the shares 
have participation. These arrangements give 
the shareholders but limited rights in earnings, 
and should be carefully investigated. Other 
limitations may restrict the value of the shares, 



AND HOW TO JUDGE THEM 49 

and one, which is present in almost every min- 
ing proposition, is the limited voting power 
which is granted to the purchased shares, the 
shares which represent the real money which 
may have been invested. According to the law 
each share has equal voting power, but if one 
man holds the majority of the shares, or if this 
majority is held by a group of men closely as- 
sociated, they can vote as they fancy, and do 
just what they please with any property. 
Elections of officers under such conditions 
mean nothing, the promoters appoint them, 
that is all ; and where it is found that the shares 
representing actual money invested are in a 
hopeless minority the investor should look well 
to the character of the men with whom he is 
taking the risk, for if they are not competent 
in the business, results'are apt to be very un- 
favorable, even though the mine they have in 
charge may be most excellent. 



VI 

Speculative and Investment Value of 
Mining Stocks 

The question of what value to place on a 
mining stock is one involving several calcula- 
tions. A mine is worth the value of the ore 
it may contain, less the cost of getting the 
value out, and turning it into money. If the 
mine being considered is a gold proposition 
the question of turning the product into money 
may be disregarded because the product is 
money. With all other mines the question of 
converting the product into cash must have 
serious attention. 

A mine may be compared to a treasure vault 
in which there is money, but how much the 
owners cannot surely tell, nor have the means 
of ascertaining with great accuracy, and it 
would be difficult for them to say what they 
were worth. So with a mine, it is a treasure 
vault in which the amount to be obtained is 
hidden, and there is also an added inconveni- 
ence, that each time the treasure vault is 
opened, each time values are extracted from it, 
considerable amounts of money must be spent. 
To such great extent must money be expended 

51 



52 MINING INVESTMENTS 

that frequently it happens that visits to the 
treasure vault may, and frequently do, result in 
expenditures greater than the worth of the 
materials taken out. What then is the value 
of an opportunity to take values hidden in the 
treasure vaults of the earth? Value the oppor- 
tunity must have, else mining stocks could 
not be sold, nor would large amounts be ex- 
pended in making an entrance of shafts and 
galleries; in seeking after these treasures 
which are unseen, but which indications prom- 
ise, the influence is largely speculative; and as 
the ground to be opened, even in the well es- 
tablished mines, is always an expectation, not 
a known condition, the element of speculation 
is present always in a mining enterprise. Even 
where no ores are known certainly to be pres- 
ent yet where strong geological indications 
make expectations reasonable, there must be 
some value. It is a chance to make some 
money, a chance difficult to reduce to any basis 
of firm calculation, for if a man felt sure and 
considered it a demonstrated certainty that he 
would make a sum of money in a given tran- 
saction, a gain of ten per cent, would be suf- 
ficient to warrant the undertaking. So in a 
simple calculation we may assume that a 
chance to make some money which may be 
considered secure is worth ninety-one per cent. 



AND HOW TO JUDGE THEM 53 

of the amount involved as a first investment. 
If the risk increases, the amount of worth for 
the value of the risk falls lower, and a man 
who would be glad to put out money on good 
security to gain ten per cent, would hesitate to 
put out the same money on doubtful security 
even though the gain, if made, would be twenty- 
five per cent. Naturally he would ask for special 
provisions if the risk were taken, and if the 
profits indicated were very great he might be 
induced to take a risk to a limited amount 
of money ; and this is the risk which is taken in 
the purchase of a mining stock. It is worth 
something and the rate can to some extent be 
calculated. If an investor buys a stock on the 
expectation that it will return him double the 
money he has risked it is fair to consider that he 
was willing to put out money on what he 
thought were good expectations that it would 
be doubled, and would make for him one hun- 
dred per cent., as it is commonly called ; that is 
double his money. If a stock is bought at one- 
fifth what the investor is led to expect he may 
obtain, then he takes a risk to recover his 
money and four times the amount as well, or 
four hundred per cent, profit, as it is somewhat 
erroneously called, because a per cent, is a 
decimal of a hundred and cannot really apply 
to more than one hundred parts; but it has 



54 MINING INVESTMENTS 

become a common usage to speak of gains be- 
yond one hundred per cent, and used in this 
sense one hundred per cent, has come to mean 
one fold, and five hundred per cent, return is 
taken at the meaning of five fold return, or 
five times the amount put out obtained as a 
profit more than the original investment; and 
as money has come to be expressed in dollars 
and hundredths of dollars or per cents., the 
usage is not inconvenient and as it expresses 
clearly the meaning one would convey it may 
be considered a development, not an error, in 
a language. 

Using per cent, in this sense we may say that 
a stock selling at 50% of par is taken for 100% 
profit if the purchaser expects that it will sell 
at par. Similarly a stock bought at 20% is 
taken to obtain a profit of four hundred per 
cent. A stock bought at 10% of par is taken on 
the expectation of winning nine hundred per 
cent, and a stock taken at one per cent, of par 
is purchased on the expectation of winning 
ninety-nine hundred, almost ten thousand per 
cent profit. Such profits are possible in min- 
ing, and we can speak of the speculation value 
as a venture for a hundred per cent, winning, 
or as a venture for winning many thousand per 
cent. The actual worth of such a risk, and 
opportunity is of an equation so variable and 



AND HOW TO JUDGE THEM 55 

fluctuating, that the only calculation which 
can be made for the speculative value, is to 
take the actual value of a mining stock, and 
add to it an allowance for the speculative 
value, but this allowance will be each man's 
opinion. The investment value of a stock can 
be calculated, and this being known, what 
would one give in addition for the stock be- 
cause of the speculative value, the chance in 
every mine that some great body of ore of high 
worth may be uncovered; and the further 
chance that a paying mine may continue as it 
is for many years and so become a source of 
long continued profits. 

In the course of mining events, and all the 
chances of the hazard a mine must some time 
in its history reach a point where no more min- 
eral can be had at a profit, so the chance of loss 
is equal, and perhaps more imminent than the 
chances of greater gain. 

In considering an investment value of a 
mining stock the calculations can be based on 
something more tangible than the uncertainties 
of unknown values. Where good mining has, 
been practiced, the mine has been opened up, 
reserves of ore are established, geological 
studies and surveys carefully made, and ma- 
chinery constructed which the mine can keep 
supplied for many years. Then a calculation 



56 MINING INVESTMENTS 

based on known, or at the worst, probable con- 
ditions, becomes more of a certainty; and the 
geologists of a well established company can 
say ore is in assured supply for such and such 
a term of years, and that the expectations of 
increased values, and the continuation of the 
veins and deposits can be reasonably counted 
on for such and such a term of years. 

On this information a value for the shares 
can be calculated. If the mine is reported on 
as good for five years with prospects, that the 
assured values will continue, and further re- 
serves of ore will be opened up, then the mine 
is on a five year purchase basis, and if the 
price of the shares is such that the net divi- 
dends will be just 20%, then all the speculative 
values are obtained for nothing, because at 
20% the money invested will be returned in 
five years and the mine has five years supply 
of ore in sight, then all which remains repre- 
senting the speculative values will be clear 
profit. Usually the owners of such a property 
want something for the speculative values, and 
S^^what is paid beyond the five dividends or 20% 
valuation may be considered the price one pays 
for the speculative value. 

If a mine is reported to be good for ten 
years dividends one might consider buying it 
on a 10% basis, and at that rate one's money 



AND HOW TO JUDGE THEM 57 

will be returned in ten years, and whatever the 
mine is worth at the end of ten years will be 
the profit; but if by chance there is a mistake 
in the estimates of the ore, and not so much is 
obtained as had been expected then there is a 
loss on the investment ; on the other hand bet- 
ter and more extensive ore deposits may be 
encountered ; though ten years is a long period 
and the element of chance cannot be eliminated 
but it may be f ortun? te, and if the calculations 
of ore in sight have been made by competent 
people it should not fall below the estimate. 
If ten years supply is in sight and one buys at 
a rate to pay less than 10% then the difference 
is what is paid for the speculative chances. 
Similarly a supply of ore to last for 20 years 
may be reported, then if this is proven one 
could buy on a 5% basis, and in twenty years 
all the capital would have been returned and 
whatever the mine might be worth at the end 
of that period would be the profit. From these 
estimates we may assume that the speculative 
and investment values of mining stocks go to- 
gether and cannot be entirely separated; con- 
sequently one who buys should take both ele- 
ments into consideration. The proven values 
should give the money again in a certain term 
of years which one may calculate from the 
dividends being paid, and the reserves of ore 



58 MINING INVESTMENTS 

in sight as estimated by competent authority; 
these are the investment values and one can 
calculate how much they are worth, and if one 
pays more than this one should consider the 
difference between the price paid and the in- 
vestment or known values, as the price he pays 
for a chance to make some money and thus 
consider carefully whether the opportunity and 
expectation is of that much value. 



VII 

The Geology of a Successful Mine 

In place of this chapter a volume could be 
written, and then the subject would not be 
exhausted. The object of the present work is 
not a scientific treatise, or even a guide for en- 
gineers. Such ambitions are far beyond our 
objects which are simply to give the facts 
which will bear on the advisability of accept- 
ing a mining proposition, and some little in- 
formation touching on the relation of mining 
to geology will be desirable. There are many 
forms of ore deposits, and of these large de- 
posits moderately rich are more favorable than 
small but immensely rich formations. An as- 
say tells very little of what may be expected 
from a mine. Suppose a mine ran fifty thous- 
and dollars to the ton, as sometimes has been 
found; it sounds attractive, but usually such 
deposits are so very small that they scarcely 
pay for working. If this fifty thousand dollar 
ore were taken from a seam, or pay streak, less 
than an inch wide, the mine would not amount 
to much, because great tunnels or expensive 
shafts would have to be opened to get at the 
ore; and when one did get at it there would 
59 



60 MINING INVESTMENTS 

not be enough to compensate for the expense, 
and thus we can see that the important ques- 
tion to consider is not how rich but how abund- 
ant an ore may be. A mine having hundreds of 
thousands of tons of ore easily worked, and 
worth ten dollars per ton would be a mighty 
fortune, where a mine containing but a few 
tons of fifty thousand dollar ore might not give 
any returns beyond the expense of opening the 
property, and, perhaps, even not so much as 
this ; for the expense of opening tunnels, and 
sinking shafts might easily amount to more 
than the value of the ore obtained. 

The question, therefore, in first considering 
a mine is not how rich the ore may be but how 
much there may be of it. A big mine is the 
best though rarely yielding the richest ore. 

Of the different forms of ore deposits we 
have most commonly vein formations, and in 
almost every prospectus the claim is made that 
the deposits occupy true fissure veins, and 
when such claims are presented it would be 
just that the prospective investor should ask 
the promoters to prove it. Fissure veins are 
rare, and in their largest meanings indicate 
fissure or cracks in the earth's crust caused by 
some great seismic action, and extending to the 
depths of the interior earth far beyond the 
point to which man's efforts can follow them. 



AND HOW TO JUDGE THEM 61 

Cracks in the rocks, though they may be ex- 
tensive, are not fissures in the earth's crust, 
and should not be spoken of as fissure veins; 
yet everywhere we find the claim made, true 
fissure veins, but of these there are few well 
defined examples in all the world; and for a 
long time it was claimed that in America true 
fissure veins were not to be found at all, but 
this is not the fact, and several have been re- 
ported on by eminent authorities. 

A fissure in the earth's crust, and cracks in 
the rocks, these two are commonly claimed as 
fissure veins, and is not a crack a fissure? 
Certainly it is, yet a fissure vein is not a crack 
in the rocks, but a former great opening in 
the earth's crust which has become filled up 
with mineral bearing ores. A fissure vein 
must be large, the sides or walls well defined, 
it will extend for some distance, and pass 
through two or more different rock formations, 
but if the ore deposit is found occupying a vein 
in one rock formation only it is usually a crack 
or local fissure in that formation. It may be 
large and of importance, but it can never be 
so large as a fissure in the crust of the earth 
passing through all rock formations down to 
unknown depth and should not be called a fis- 
sure vein. 

The formation of ore deposits such as 



62 MINING INVESTMENTS 

are usually worked, may be for ordinary 
usage divided into but three classes, though 
scientifically many other classifications are 
required to accurately describe the different 
forms of ore accumulations. For ordinary in- 
vestigations it is sufficient if we consider the 
three kinds of ore deposits as follows: Those 
which have been derived from mineral bearing 
solutions, and crystallized, percipitated or re- 
placed out of the solution; next those which 
are simply accumulations of the ore by me- 
chanical means, and, finally those which are 
eroded out of the surrounding rocks, and have 
collected in gravel, or sand beds, called placer 
deposits. All these forms present numerous 
modifications; the mines formed from mineral 
bearing solutions generally belong to periods 
of heated activities during which fissures were 
developed in the earth's crust, and cracks, and 
gaping rents were formed among the rocks; 
and heated waters, rising vapors and chemi- 
cal changes exerted their influences to form ore 
deposits. Subsequently waters proceeding from 
the depths of the earth forced upward, or perco- 
lating downward from the surface, or following 
drainage zones among the rocks dissolved out 
minerals, on their way encountered sulphides, 
and first rusting and then dissolving them be- 
came acid, thus increasing their activities in 



AND HOW TO JUDGE THEM 63 

dissolving minerals, till they became over- 
charged; and as a result threw down some of 
the burden in cracks, rents and cavities or fis- 
sures; continuing the action for a long, long 
period of geological formation; continually de- 
positing a little and a little, till at last the veins 
were filled, and the mineral bearing solutions 
were forced, perhaps, among all the surround- 
ing rocks forming outlying trailers as it were to 
the main deposits. Sometimes a mineral bear- 
ing acid solution will have encountered a for- 
mation of alkaline rocks, limestone, etc., the 
alkalie will be easier to carry than the other 
minerals so the solution takes up or dissolves 
alkalies and deposits minerals in their places; 
and similarly lime waters which are alkaline, 
and may be mineral bearing, will, on coming in 
contact with acid rocks, take up the acid ele- 
ment to neutralize the alkalies and deposit min- 
eral in the place. Under some one, or another 
of these forms the ore deposits found in veins, 
seams, cavities, cracks, contacts, replacements 
or fissures will have been formed ; but the only 
questions which interest the investor are how 
big is the deposit in which I am asked to take 
a share? How rich is the ore? And will the 
mine continue production long enough to re- 
turn a profit on the money which I may invest? 
To answer these questions one must be in- 



64 MINING INVESTMENTS 

formed of all the intricate science of economic 
geology, but a few indications can be given. 

A mine found among the rock formations 
should occupy a well defined space, the larger 
the better; and the ore should be fairly even 
in appearance, texture and assay valuation. 

The ore should show values in a reasonable 
distance from the surface, two to fifty feet; 
there have been notable exceptions, but as a 
usual condition a mine does not grow richer 
at a greater depth. For a time values increase, 
then deeper still decrease, and when the water 
level has been reached the permanent values are 
developed and usually these are not so great by 
far, and sometimes the mine becomes so lean 
that further work must be abandoned because 
it will not pay. 

Other forms of ore deposits are developed by 
mechanical accumulations; these are iron de- 
posits, coal beds, zinc or lead accumulations as 
residuals from rocks which have been wasted 
away ; and less abundant chrome or manganese 
deposits residuals from rocks which have con- 
tained these elements. Here a mechanical ac- 
tion takes place, the material is accumulated 
through the influence of erosion or the decay 
of rocks ; or, in the case of coal deposits, the ac- 
cumulation of vegetable material with such 
rapidity that, continually piling up, it is pro- 



AND HOW TO JUDGE THEM 65 

tected from the air and cannot oxidize or decay, 
and so carbonizes to form coal. The petroleum 
deposits are taken to have originated from fats 
of animals, and the oils of plants, collected 
where it would be protected from the oxida- 
tion of the air, and gradually the change has 
taken place too for petroleum. Thus by me- 
chanical means we find that many mineral de- 
posits have been accumulated. In some, both 
mechanical and chemical influences work one 
with the other, as in the precipitated salt beds, 
gypsum beds, iron ores of some regions and 
other minerals; but the mechanical predomi- 
nates and in relation to all these deposits the 
questions which the investor will ask are in 
regard to size and purity; for deposits of less 
valuable ores and minerals must be large and 
very pure; and also so situated that they can 
be transported at low rates, if the proposition 
is to yield a profit. If deposits of this class are 
found to be large, to yield pure materials and 
to be so situated that the product can be car- 
ried to a market at a good profit it is fair to 
take a portion of the proposition, provided that 
the price is reasonable. 

Those ore deposits called placers in which 
the material sought is found mingled with 
sand, gravel or other products of erosion are 
usually productive of the precious metals, gold, 



66 MINING INVESTMENTS 

platinum, and to its allied minerals and also 
precious stones, and certain of the rare ele- 
ments used in the arts. The development of 
such deposits is of great interest, and usually 
the various stages of formation can be traced 
in sequence; the washing down, and breaking 
away of rocks among the mountains, and the 
hills ; the grinding, crushing and gradual wear- 
ing down of this material in the streams and 
water courses and finally the collection of the 
precious metals, rare elements, or rich gem 
stones at convenient places. With these for- 
mations the questions which should be asked 
by an investor relate more particularly to the 
facilities for working the deposit; for if these 
are good, a deposit which is large though really 
lean in mineralization may be worked to very 
great advantage, and substantial profit. If it 
is big enough — that is the great and all im- 
portant question and should be considered 
with special care when investigating any ore 
deposit. Bigness, however, is but a relative con- 
dition, for in a gold mine a vein two feet wide 
and well defined would, if it carried good 
values, be of great importance; but as an iron 
or coal mine would probably be considered not 
worth operating unless the mineral were very 
pure, the conditions for mining unusually fa- 
vorable and a market just at hand. Size is 



AND HOW TO JUDGE THEM 67 

therefore relative and it may be considered 
favorable when it is large for the kind of min- 
eral which the deposit may yield. 

Another condition of geological formation 
which should be considered in relation to a 
mining proposition is the structural formation 
of the surrounding rocks. If these are very 
hard the cost of tunneling and sinking shafts 
will be great, perhaps so great that a loss may 
result where a profit had been anticipated. On 
the other hand, if the rocks or surrounding 
formations are too soft the cost of supporting 
the tunnels, and openings, so that they will 
not cave in may be very great, and a heavy 
charge on the operations; then, as sometimes 
happens, the insecure formations may collapse 
causing loss and often death. The proper con- 
dition is one where the rocks are firm enough 
to hold in place with reasonable supports, and 
yet are not so hard that mining will be at- 
tended by more than ordinary expense. 

Still another condition must be considered, 
as it may be very adverse to profitable oper- 
ations, and this is faulting. The earth's crust 
is frequently in destructive movement and 
sometimes it happens that a mineral deposit 
apparently good at one place may be found 
shattered and destroyed at another, so that 
profitable working is not possible. To inquire 



68 MINING INVESTMENTS 

whether faults may be expected and give an 
intelligent report requires skill and long prac- 
tice, and even then no one who understands 
the science of economic geology will speak 
with great assurance. In a general way it may 
be said that if a mine is located in a country 
where seismic activities have been in evidence, 
and the rocks are found broken and distorted, 
then faults may be expected and the investor 
should proceed with caution. 

The presence of water may seem to some 
scarcely a geological condition surrounding a 
mine, yet it is a most important condition and 
one which must be reckoned with and watched. 
The water which accumulates in a mine must 
be pumped out; pumping is expensive work, 
and may eat continually at the profits to such 
an extent as to sometimes make a mine un- 
profitable. 

This chapter is but an outline, yet the prin- 
cipal conditions have been noted, and an in- 
vestor who informs himself in regard to these 
and finds the conditions to be favorable, will 
be justified in taking a venture in the property 
offered to him, but if the conditions do not 
seem favorable then it would not be well to 
take the venture, but look for something in 
which favoring geological surroundings can be 
found. 



VIII 

Physical Conditions Which Should 

Surround a Successful Equipment 

for a Mine 

A mine may be equipped with the best ma- 
chinery and materials for its operation, but this 
is not sufficient to insure favorable results. 
The equipment is necessary, but if the physical 
surroundings are such that the machinery can- 
not be operated to advantage the equipment 
may be a total loss. It seems strange that such 
a question should be considered, and that those 
who have an enterprise in charge do not for- 
see the difficulties ; but frequently they do not, 
and one abundant cause contributing to lack of 
foresight, is the hope which all possess, the 
eager expectation, the belief that conditions 
will turn out to advantage. These feelings 
with statements from mining engineers, es- 
pecially engineers who have machinery to sell, 
that they can design and set up a successful 
plant, lead on to expenditures which a study of 
the physical conditions would have deterred. 

An incident in explanation. One of the most 
69 



70 MINING INVESTMENTS 

successful mining engineers and promoters 
spent many thousands of dollars, it is stated, 
on a mine where there was an abundance of 
good ore situated on a certain coast. The ore 
was to have been shipped by steamers, but 
when preparations had been made it was found 
that neither steamers or any kind of vessel 
could approach the coast, and that the ore 
could not be shipped; a detail of physical sur- 
roundings, which, in the eagerness to win the 
great supplies of ore, had been entirely over- 
looked. To the powerful mining interest back- 
ing the venture the loss, though considerable 
was not disastrous, and the proposition was 
abandoned. If it had been a mining company 
raising money from the sale of stock, another 
would have been added to the long list of min- 
ing ventures resulting in a total loss. 

When, in the history of a mine, the period 
comes in which machinery is to be ordered, 
dependence must be placed on the skill of min- 
ing engineers ; and while they may make griev- 
ous mistakes at times, usually the equipment 
they recommend after due examination of the 
property will do the work; but too frequently 
incompetent men are employed, or, worse yet, 
a so-called practical miner is put in charge and 
then disaster will be almost certain. 

The science and practice of mining is divided 



AND HOW TO JUDGE THEM 71 

into three distinct branches in the hands of 
the geologist, the metallurgist and the mining 
engineer. The geologist reports, or should re- 
port, first giving a clear statement of the 
ore formations, the probable extent of the ore 
bodies and the physical conations which sur- 
round the mine to facilitate or retard its oper- 
ations. The metallurgist should then study 
and report on the treatment which the ore may 
require in order to extract the metals success- 
fully. The mining engineer should then take 
these reports and design his machinery to 
meet the conditions which may have been 
found, provided, of course, that physical con- 
ditions have not been encountered which indi- 
cate that no profit can be had in operating the 
mine. The work of the geologist and metallur- 
gist can be, and frequently are, undertaken by 
one man ; but the preparation and designing of 
machinery requires such a different train of 
thoughts and education that the mechanical 
and scientific parts of mining do not combine 
to advantage in the hands of one person; and 
this is a frequent cause of loss through errors 
when geologists and metallurgists attempt to 
design machinery, or when engineers attempt 
to make the geological reports. One not being 
trained in the specialty of the other overlooks 
some details resulting often in disaster for the 



72 MINING INVESTMENTS 

enterprise. When an investor is asked to take 
a venture in a mining proposition he should in- 
quire whether the reports have been made by 
competent and qualified men, and that an engi- 
neer has designed the machinery who is not 
only qualified and competent but is also dis- 
interested, and is not to profit by the sale of 
certain machinery which he may recommend. 
If the question of designing the machinery is 
in competent hands, of an engineer who has re- 
ceived reports from competent people so that 
he is well informed as to the conditions with 
which his equipment must contend, the investor 
can ask no more; and expectations for success 
are on a strong foundation. If, on the other 
hand, the investor learns that the different ex- 
aminations and surveys have not been carefully 
made by competent men, and that the mine is 
taking a long chance on expectations, then in- 
quiries should be in order and certain con- 
ditions looked up with care. Those conditions 
which may prevent the successful consumma- 
tion of plans in mining ventures are, some of 
them, as follows : Often a mine may be abund- 
antly rich but inaccessible to an extent that the 
cost of setting up machinery would be so great 
that profits could not be made. The recent de- 
velopments of mining interests in the State of 
Nevada are to some extent an illustration. 



AND HOW TO JUDGE THEM 73 

Years ago these mines, which with better trans- 
portations are now in eager demand, were 
known and some of them even located, and in 
places attempts at working them were made, 
but almost all gave no results ; the costs were 
everywhere too excessive, and for years Ne- 
vada lay a great abandoned camp. Tales of 
riches came from time to time but always little 
heed was given, conditions for maintenance 
were too unfavorable, machinery would then 
have been too costly in such remote places; 
and even now mining must struggle with ad- 
verse conditions of transportation in Nevada, 
and some must wait till better facilities can be 
provided. In former years I frequently had 
offers from prospectors with requests that I 
would introduce them to men of capital who 
might be induced to provide money for making 
and maintaining mineral locations in Nevada. 
But in those days mining propositions had but 
little favor, and no one cared to risk money 
against the then adverse conditions in the 
deserts of that state. Probably this was an 
error of judgment, because to acquire a prom- 
ising mineral deposit and hold it till conditions 
for its operations become more favorable is al- 
ways good business, yet to attempt operations 
on the same mine while the conditions are still 
adverse may be the height of folly. 



74 MINING INVESTMENTS 

This question of accessibility is one of the 
most potent physical conditions which may 
retard successful mining, and millions of dol- 
lars have been lost in attempting to set up 
machinery in distant places, usually because 
the plans are too ambitious, and the machinery 
too heavy for the difficulties which must be 
overcome during the transportation. This, 
however, is not the only adverse physical con- 
dition. 

Sometimes machinery requiring an abund- 
ant supply of water is sent where water is not 
under good control, or perhaps cannot be had 
at all. Particularly is this true of hydraulic 
mining propositions, where a heavy head, or 
fall of water is required to be conducted 
through iron pipes and then directed with great 
force against the gravel beds, with which the 
precious metals are found mingled ; and, wash- 
ing down the gravel cause it to be carried by 
the water through long sluice ways where the 
gravel is washed off, and the gold dust being 
of greater specific gravity settles down and 
when the water has been turned aside, can be 
collected. A very simple process and if mis- 
takes have not been made in calculating the 
supply, the fall and the means of controlling 
the water, profits are almost certain to be ob- 
tained. When such a proposition is presented, 



AND HOW TO JUDGE THEM 75 

the investor should make sure that the sup- 
plies of water have been surveyed by com- 
petent men and if not, then special inquiries 
should be made before accepting the venture. 

Another physical condition working on ad- 
verse influence in hydraulic mining is that the 
beds may be so situated that there is no con- 
venient place to dispose of the gravel after it 
has been washed through the sluce boxes. It 
is a common practice to wash this gravel into 
water courses, but at some places this is not 
permitted, at others it cannot be done, and the 
gravel piling up may soon put an end to mining 
operations. In some cases the gravel can be 
elevated and carried off by a heavy head of 
water which will rise to a level higher than 
that of the gravel bed; but such, however, 
is not always available and an investor should 
see to it that means and places are at hand 
where, in gravel mining, the accumulations of 
washed out material can be conveniently dis- 
posed of. 

In treating ores which must be crushed and 
ground it happens sometimes that the ma- 
chinery is not strong enough to reduce the ore 
to a sufficiently fine powder in order to extract 
the minerals, a matter which should never be 
an impediment, but which frequently works 
great disadvantage in a mining proposition; 



76 MINING INVESTMENTS 

and even well known mining engineers have 
been at fault by not providing machinery of 
strength sufficient to withstand the strain. 

Where ores are to be smelted it often hap- 
pens that fluxes, that is, material which will 
help melt the ore, are not at hand, or being at 
hand the cost and difficulties attending their 
delivery at the works are such that operations 
show a loss. A simple matter such as this has 
many times caused ruin in an enterprise where 
more careful investigations would have saved 
the loss of time and money. 

Always in every mining proposition there 
are difficulties which must be overcome before 
the machinery can be operated with success, 
and often physical conditions which are of 
themselves but simple matters have been over- 
looked. Those which principally work to im- 
pede the successful development of a mining 
proposition have been noted, and an investor 
of discernment can by making inquiries ascer- 
tain whether the physical surroundings are 
favorable or are adverse, and whether all have 
been studied and reported on by competent 
men of good reputation. To pass on the 
physical surroundings of a mine does not re- 
quire great skill, the questions are largely prac- 
tical, relating to means of transportation, easy 
access for shipment, facilities for maintenance, 



AND HOW TO JUDGE THEM 77 

supplies of water, abundance of timber, sup- 
plies of materials for smelting, the relative po- 
sition of the ore bodies to the fall of water, 
where such is required, and the strength of ma- 
chinery which may be required in treating the 
ore ; and where a competent man has passed on 
these an investor may be warranted in placing 
some money in the venture, provided other 
conditions, the supply of satisfactory ore and 
the general prospects promise well. 



IX 

Personnel and Business Organization 

Required to Attain Success in 

Mining 

Probably the claim that mining is a difficult 
business will not be disputed. The technicali- 
ties where trained skill is required are many, 
yet though the fact is well-known, men who 
have no adequate information in regard to the 
science and profession of mining engineering, 
are so frequently in charge of mining enter- 
prises that it is well said that any one thinks 
he can run a mine successfully; a mistake at- 
tested by the numerous disasters which fol- 
lowing mining ventures. 

I have been called on to examine many un- 
successful mining enterprises where I have 
found doctors of medicine, doctors of di- 
vinity, lawyers, journalists, brokers, farmers, 
army officers, sea captains, in fact men of al- 
most every calling in charge of the enterprises, 
and it is scarcely worth while to add that the 
mines were unsuccessful. 

One would think that a doctor of medicine 

79 



80 MINING INVESTMENTS 

would hardly be calculated to make a success 
of mining, yet there are many who make the 
attempt, and I cannot recall one who has been 
successful. Of the doctors of divinity and 
plain ordinary ministers there are some, but 
the "golden rule" does not seem to fit well; 
perhaps the ministers are too confiding, at any 
rate they are usually most woefully "stuck," 
and come out of it with anything but credit. 
When lawyers leave the work of corporate 
organization, and financing the enterprise, to 
take up the physical management of a mining 
property they are about the easiest proposition 
a designing operator or mining engineer with 
machinery to sell can encounter, and the list 
of failures in mining enterprises managed by 
lawyers is very long and painful. 

A young lawyer was sent to Alaska during 
the former days of excitement and speculation. 
He had a good trip, superintended the invest- 
ment of a million or so of dollars on behalf of 
a company of such prominence that its name 
was known throughout the country. The 
whole scheme was unfortunate, results were 
not adequate; the man was honest, brilliant, 
trained in legal technicalities, a splendid lawyer, 
but the relationship between the expenditures 
and the compensating results which must be 
looked for he did not understand. Why should 



AND HOW TO JUDGE THEM 81 

any one expect that he would obtain results? 
And as was natural, the enterprise was a fail- 
ure absolute in total, and the stock is worth 
not one cent a share today. To multiply illus- 
trations would serve little purpose; one more, 
however, will be instructive. A young lawyer 
was sent west during the rougher days of de- 
velopment in that section of the country. He 
undertook to manage a mine where a tunnel 
was to open up a large ore deposit. Work was 
ordered, the young man was made much of, 
progress was rapid and reports satisfactory. 
A long tunnel was in construction, nicely but 
not heavily timbered, paid for at contract 
prices ; and the snow deep on the mountain did 
not impede the work. But when the spring- 
time came melting snows revealed a lot of col- 
lapsing timbers on the mountainside; the 
miners had simply tunnelled through the 
snow. Dishonest? Of course it was, but the 
young lawyer had been stuck, and the money 
was lost just the same. Dishonesty is so com- 
mon in mining that only those who have been 
trained to know when work is proceeding 
properly can expect to contend successfully 
against it. 

Of all the people who without the necessary 
training attempt to manage mining enterprises 
lawyers make the most failures, though some 



82 MINING INVESTMENTS 

lawyers do make great successes; but usually 
they have surrounded themselves with com- 
petent, trustworthy engineers, geologists and 
mine operators. 

To enumerate instances would be of little 
value. The history of enterprises managed by 
people who do not understand the require- 
ments of the work they have undertaken ; who 
do not know good work, and cannot distin- 
guish it from bad, have but one ending-^fail- 
ure, and so probably it will always be. 

Of more use and interest is it to inquire of 
the successes in mining operation, in order that 
an investor may seek for similar organizations. 
One would not care to invest in a bake shop 
which a shoemaker proposed to set up, and 
operate; nor in any business which a man 
without the necessary training was proposing 
to establish; a carpenter could not operate a 
tailoring shop, nor could a cook be expected to 
make successful work of house painting; yet 
not more out of place than these are some who 
undertake to manage mining operations. 

Surely it is a simple matter of inquiry to as- 
certain whether those who ask for money with 
which to operate a mine understand the work 
which they propose, and common sense should 
prompt one to seek participation in mining 
operations with mining men; competent men 



AND HOW TO JUDGE THEM 83 

trained to the work, and better yet, with those 
who have made records for success. There 
are mining engineers who, in a few hours, can 
obtain almost any sum of money for mining 
operations, because many people know that 
they have been successful, and are eager to 
participate in enterprises which they recom- 
mend. This is good practice, and right pro- 
cedure on the part of an investor; not only to 
seek investments with those who understand 
what they are undertaking, but to seek also 
practical mine operators, for there are many 
who understand the business, and have fol- 
lowed it as a business, not a technical pro- 
fession. I refer to people who actually oper- 
ate mines, not brokers in mining shares, for 
they rarely know much of actual mining and 
where they attempt to manage operations in 
place of speculations, usually make disastrous 
failures. One can buy stocks through brokers 
and one should look to his broker for accurate 
information in regard to the properties whose 
stocks they handle. Where a broker is a care- 
ful student of values, and conditions, his 
guidance is most valuable, and through deal- 
ing with competent, trustworthy brokers many 
investors have made comfortable fortunes 
through investments in mining shares. There 
are, unfortunately, many brokers and agents 



84 MINING INVESTMENTS 

handling mining stocks who are not worthy ol 
confidence; so many such, in fact, that mining 
stocks have become discredited to an ex- 
tent that they are frequently spoken of as a 
reproach, when in reality they are the most 
profitable ventures which one can undertake; 
the only investments where a small amount of 
money can make profits which are sometimes 
a competency for the fortunate possessors. To 
be successful requires many precautions, not 
the least of which is to know the people, the 
reliability of the man who recommends, the 
capability of the men who propose to operate 
and something of the business organization. 

In all walks of life there are dishonest men, 
hosts of men are incompetent, the vast ma- 
jority of all men are failures ; why then should 
mining come in for such severe treatment of 
public criticism, when there are, perhaps, more 
successes and greater returns in legitimate 
mining than in any other enterprise? 

Plain business methods should apply, and 
this introduces the subject of the business or- 
ganization. It may consist of a well fur- 
nished office, a big safe, a stock book and a 
talkative promoter. Probably there will be 
prospectuses, maps and numerous samples. 
An outfit such as this should make one 
cautious* and whenever the flag is put out, 



AND HOW TO JUDGE THEM »5 

as it were, to catch the eye, the investor should 
beware. What he should look for is an organi- 
zation which will be useful to the work pro- 
posed, not attractive furnishing to catch the 
eye; and not to place too much reliance on 
specimens shown by people on whose state- 
ments one cannot thoroughly rely. A story is 
told of how it happened once in London that a 
broker in mines had sold a property, and 
among the samples he had shown was one of 
great beauty, white quartz studded with gold, 
a specimen to be desired. The mine had been 
disposed of, and a friend who had helped in the 
transaction said to the broker : "Now the mine 
is sold you do not need the specimen, let me 
have it for my collection." The broker hesi- 
tated, took up the pretty piece of ore, stroked 
it and then said : "No, you can't have it ; this is 
the third mine I have sold with that sample 
and I think I need it in my business.'' 

Here is a criterion on business organization: 
bright specimens and show; if it is to sell the 
stock it will be in this form ; if it is to work the 
mine it will be in another form; one will be 
arranged to attract the eye, the other to facili- 
tate work for the mines. Where the object 
in view is simply to sell the stock, the attract- 
ive will predominate; where facilities to work 
for the mining operations are considered, prac- 



86 MINING INVESTMENTS 

tical and often inexpensive equipment will be 
found. The atmosphere of a place to catch 
the fancy is so different from that of a place 
organized to accomplish some practical work 
that one should not be deceived. If doubt 
is caused by the surroundings one should in- 
quire what the plans might be for business 
organization, and should be shown plans such 
as practical business men would approve. 
The office, at the financial center, where the 
mine is being offered, should be good enough 
to enable those who have the work in charge 
to exhibit successfully the maps, reports and 
specimens, and to show the special advantages 
of the property seeking capital for its oper- 
ation. They should show what it is costing 
to raise the money through sale of shares ; they 
should show what work is being done on the 
property they represent, or what money is be- 
ing accumulated to provide for work; they 
should show the names of men on the board of 
directors who are competent to pass on propo- 
sitions relating to the practical operation of a 
mine ; they should show suitable arrangements 
for obtaining their machinery, and competent 
reports of the requirements which it must fill 
in order to win money from the ore; they 
should show their system of accounts, and 
how they propose to cheek up the expenditures 



AND HOW TO JUDGE THEM 87 

with the results obtained; they should show 
what arrangements are in progress for the 
organization of the working force at the mines, 
and the system proposed for checking up the 
daily expenditures, and accounts; they should 
show what systems they propose, or have es- 
tablished, for taking care of the mineral which 
may be obtained; if the proposition is one 
handling products which must be marketed 
they should show what arrangements are being 
made for handling the sales department and 
finally they should show that they have the 
services of a competent mining man, or better 
yet, mining engineer to have charge of the 
operations at the mine. If on investigation it 
is found that these particulars of organization 
are not receiving much attention, then it is 
pretty evident that they are not thinking of 
mining, but only of selling stock; and on gen- 
eral principles their proposition is safe to let 
alone. 



Inquiries Which Should be Made Before 

Accepting a Mining Venture; 

How to Make Them 

There is scarcely a limit to the inquiries 
which one could make in regard to a mining 
proposition; a few, however, are essential, and 
from these one can form a clear idea of what 
the opportunities may be. Of one thing a per- 
son may be absolutely sure, no mining propo- 
sition can be offered which is not worth in- 
vestigating; and if one but investigates wisely, 
and selects desirable propositions one will be- 
come rich through successful mining invest- 
ments. Many a proposition will be found lack- 
ing in merit and not worthy of an investment, 
but all are worth investigating, because only by 
investigation can one find the desirable propo- 
sitions. 

In making the inquiries one should first 
ascertain what the proposition really is in 
regard to its present status, that is, at the time 
when one is asked to embark on the venture. 
The prospectus will tell of shafts and gal- 

89 



90 MINING INVESTMENTS 

leries to be opened, mills which are to be 
erected, estimates of earnings will be quoted, 
and dividends to be paid will be mentioned. 
As a matter of fact the mine may have none of 
these things, and whether it gets them or not 
will depend on whether the promoters suc- 
ceed in selling the shares to provide money to 
pay for the proposed improvements; and hav- 
ing secured the money there is still a question 
as to whether the results cited in the pros- 
pectus will be attained even after the money 
has been raised, for all managements are not 
successful. The first inquiries therefore should 
relate to what the mine really is at the time of 
investment. Let the prospective investor make 
the following inquiries: He should ask to see 
the original reports which the engineers or 
geologists have made. In these reports he 
should find an accurate description of the 
property, as the geologist found it. If such 
description is not in the report, then the in- 
vestor may well decide that the promoters are 
proceeding without definite information, and 
are therefore showing indications either of in- 
capability or dishonesty, and the investor can 
let the proposition alone. 

He should next inquire what actual money 
has been expended, first in the acquisition of 
the property, and after that in the improve- 



AND HOW TO JUDGE THEM 91 

ments which have been made. His next step 
should be to compare the reported cost of, and 
the improvements on the property under his 
consideration with the cost of similar proper- 
ties and improvements which have been made 
on successful mines. Usually the figures can 
be had by getting the annual reports from 
several different mining companies which are 
successful, and comparing the costs and re- 
sults at these properties with the costs and re- 
sults at the mine in which he is asked to in- 
vest. If it is seen that the proposition he is 
considering is being operated at a much 
greater cost than were the successful mines, 
then it is evident that mismanagement is in- 
dicated, and he should not invest, because no 
matter how good a mine may be, if it is mis- 
managed it will not be profitable for the stock- 
holders. In making investigation for efficiency 
the investigator must remember that a new 
proposition can never be on as good a work- 
ing basis as a well organized and established 
property, but if there is a very great discrep- 
ancy then the new proposition is not being 
operated to reasonable efficiency and should 
be let alone. 

Having found what the actual state of the 
property is, the next inquiry should be what is 
the property actually worth in money, not 



92 MINING INVESTMENTS 

prospects. This actual worth is often difficult 
to ascertain, but in every mining country there 
are bankers, brokers and dealers in mining 
property; and one can write to some person 
situated near the mine in question to ascertain 
at what rates mining property can be pur- 
chased. If one is considering a mining invest- 
ment, it is worth while to write such letters, 
because by this means one may very often hear 
of really desirable propositions to be had at 
low rates, or rather, at fair rates ; because min- 
ing property if it is good for anything is cost- 
ly. Having ascertained approximately what 
the worth of similar property may be, one can 
make an estimate of the actual worth of the 
proposition in which he is asked to invest. 
This actual worth divided by the number of 
shares in the proposition gives the actual worth 
per share. This represents the actual present 
worth, but the shares must be of greater value, 
the prospect must be good and worth some- 
thing, else the shares would not be worth buy- 
ing. To calculate what is being paid for the 
prospect, the chance of making a big profit, 
take the actual worth of a share and subtract 
it from the price at which they are offered. 
Now we have the question — is the prospect 
worth the amount represented by the differ- 
ence — the most difficult question in mining, 



AND HOW TO JUDGE THEM 93 

for it deals with speculative quantities, and 
conditions which can be estimated but not 
surely known. To proceed in estimating what 
the chances are one must compare the propo- 
sition offered with the early conditions which 
were found in successful mines and properties 
which have turned out winners to the great 
profit of their owners. To obtain this infor- 
mation one can visit the public libraries, and 
look back among the old files of the mining 
journals of the dates corresponding to the 
period of the first history of any great mine; 
and there pretty certainly will be found accu- 
rate descriptions and published reports, or, if 
these are inaccessible, one can send a subscrip- 
tion to one of the better class mining papers, 
and ask for information as to the early history 
of some two or three mines which he would 
like to compare in their earlier or prospective 
stages with the property in which he is asked 
to invest. He should seek the technical mining 
papers for his information; the mining press 
which deals with questions of investment 
values has, up to the present time, been of but 
little service. The technical papers are man- 
aged by men skilled in the technicalities of 
mining, and will have the best authorities on 
mining among their contributors; and any in- 
formation which may be had from them will 



94 MINING INVESTMENTS 

be worthy of careful thought and consider- 
ation. They will treat, however, only of tech- 
nical subjects in their relations to mining; in 
regard to investment or speculative values 
they will have very little information. Such 
points the investor must decide for himself. If 
he has good judgment in selecting mining in- 
vestments he can make a fortune, but if after 
four or five trials he finds that his judgment 
has not been good then he had better seek 
some other field of industry for his ventures. 
When one has received the information in re- 
gard to the early history of great mines it will 
be found, in the majority of cases, that the 
properties have been great from the start, that 
the exposures of ore have been large and have 
attracted wide attention. One will find, on the 
other hand, that in only a few instances have 
inferior showings of mineral led to great mines, 
though there are some notable exceptions. 
One may judge and be warranted in the opin- 
ion that where there are great ore exposures 
the prospective value is worth a considerable 
amount of money, and in some instances may 
warrant a very high price for the shares, much 
more than the total of actual values existing 
before development. If it is a medium ex- 
posure of ore, and expectations are entertained 
that on opening the property greater values 



AND HOW TO JUDGE THEM 95 

would develop, the prospective value is worth 
something more than the actual selling values 
at the time this stock is offered. Especially is 
this true if the ore exposures are of a quality 
which will pay for mining, and treatment to 
extract the metals ; but if the ore exposures are 
of poor quality, not sufficiently valuable to pay 
for the working and milling; or if there are 
only inferior amounts exposed though the 
quality may be good, and the mine to pay must 
find larger ore deposits, the stock is worth 
very little more than the actual selling value 
for the property, and if there is no selling or 
actual value then the stock may be considered 
worthless, though one might give a few cents 
a share for the chance that something valuable 
might be found, especially if the speculation is 
in the hands of capable people. 

In making these investigations one must 
trust very much to others. Investing money 
is intrusting it to others who will use it and 
pay for the privilege; and as some can be 
trusted, and some cannot, and as some are suc- 
cessful and some are not, an investor who 
would make money on his investments must 
find men who combine the two qualities ; they 
must be trustworthy and they must be suc- 
cessful in the line of enterprise for which they 
solicit the co-operation of capital. In mining 



96 MINING INVESTMENTS 

one will secure better returns with the right 
kind of people than in any other line of busi- 
ness; however, doctors of medicine who have 
not secured a practice, lawyers without briefs, 
ministers without charges and business men 
who have been unsuccessful in other oper- 
ations are not more apt to be successful at 
mining than they have been in their previous 
callings ; and however honest they may be it is 
not honesty alone, but profits for the use of 
money which the investor wants. The most 
important part of the investigation to an in- 
vestor is the investigation of the people to 
whom his money is to be intrusted, because if 
the people are reliable and successful one can 
be pretty safe in taking a chance with them; 
and if they are of doubtful record or if they 
have not been successful one had best let the 
proposition go and look for something better. 

In making the investigation of people one 
can proceed with some assurance that the in- 
formation can be promptly and accurately ob- 
tained. 

If a person has money to invest it is 
natural that he should have a bank account, 
and his first step in making an investigation 
should be a request to his bank to write the 
bank nearest the place where the mine is situ- 
ated and ascertain what the local credit and 



AND HOW TO JUDGE THEM 97 

standing may be for the enterprise under con- 
sideration. This will give him an idea of the 
credit of the parties, and the property. The 
opinions which may be given by the bank offi- 
cers as to the advisability of investing in the 
mine are of little value, for bank officers know 
nothing of mining, and have persuaded many 
people to turn away from mining propositions, 
which have made fortunes for others who had 
assumed the risk. Mining is a risk and a 
speculation, and as such has no part in bank- 
ing ; the bank officers deal in loans, and credits, 
and are supposed to know the standing of 
people and enterprises in the communities 
about them ; a letter from one bank to another 
making inquiries is pretty sure to be promptly 
and accurately answered, and the investor will 
learn that the proposition he is considering is 
of good, fair, indifferent or questionable local 
reputation; and can to that extent ascertain 
whether the managers are to be trusted with 
his money. 

Let him next take the names of all the offi- 
cers, including the directors of the enterprise, 
and in the same way have his bank write local 
banks where these people may reside, and find 
out what their local reputation may be worth. 

Next he should ascertain which one, or more, 
among the officers represent the active pro- 



98 MINING INVESTMENTS 

moting interest in the enterprise. Let him 
then take these names and the name of the 
company, and get a commercial credit report 
on them from some one of the great rating 
agencies, asking for information in regard to 
both the people and the enterprise; this will 
give their general credit and reputation; but 
the mercantile rating agencies are often mis- 
taken, most grievously mistaken, and many 
worthy people suffer because of statements 
which they make. Two instances will illus- 
trate. I have certain knowledge of an inquiry 
which was made o£ a very prominent mer- 
cantile rating agency. The report stated that 
the parties were unknown, had no credit and 
no commercial standing. The people were not 
rich but they were prospering in a small way, 
and were so honest and reliable that one might 
intrust them with anything he had. In an- 
other instance the same agency reported forty 
thousand dollars assets, a flourishing cash 
business and nothing known against the repu- 
tation for a man who, at the time the report 
was made, was a confirmed drunkard, paying 
no one where he could get out of it and with 
a personal standing which was almost disrepu- 
table. These instances show that the mercan- 
tile rating agencies are not always reliable, but 
while they make mistakes at times, their in- 



AND HOW TO JUDGE THEM 99 

formation is always to be sought, and in the 
great majority of cases is accurate and valu- 
able; but one cannot rely on the rating 
agencies entirely, because they would probably 
give a most adverse report against a poor but 
honest miner, who might have a property in 
his control out of which he could make a for- 
tune for himself, and others, if only they would 
intrust a little money to him. 

Having obtained all the information possible 
in regard to the people who are presenting a 
mining enterprise, the next line of inquiry 
should be in regard to the economic geologist, 
metallurgist or mining engineer who had ex- 
amined and reported on the property. He 
recommends it, otherwise the promoters would 
not publish his report. Probably the com- 
pany's officers will supply the record from 
which the investor can make his own inquiries 
— these should be to ascertain what the per- 
son may know, where he attained the infor- 
mation, where and to what extent he has 
studied, what scientific societies have given 
him recognition and what enterprises he has 
served in a capacity similar to the capacity in 
which he is serving the enterprise which seeks 
the investor's money. Inquiries to the scien- 
tific and technical societies with which he may 
be connected, his former employers, and the 



100 MINING INVESTMENTS 

people with whom the gentleman may have 
had relations will show his character, stand- 
ing and abilities ; and give the investor an idea 
as to what his recommendations, and opinions 
may be worth. 

Here certainly is a lot of work recommended 
to the investor who may think of taking a ven- 
ture in a mine, but nothing of success can be 
had without work. One can make a fortune 
through successful mining investments, but 
if one simply wants to take a chance, and will 
invest haphazard through reading an adver- 
tisement, or an unconfirmed prospectus, re- 
turns can be expected only if one is lucky ; and 
when it comes to playing on one's luck it is 
just as well to visit the gambling table and 
have some fun at the game, for money is just 
about as sure to be lost at haphazard mining 
investments as it is at gambling. 



XI 



Conditions Under Which a Mining 
Proposition May be Accepted 

Let us suppose that an investor has decided 
that it is worth while to undertake operations 
in mining stocks, and has made a series of in- 
vestigations, and has the facts from which to 
decide for or against a proposition; and has 
now to debate the situation, to decide whether 
or not he shall risk the money. Naturally the 
conclusion has been reached that there is noth- 
ing in mining which can be considered sure, 
yet the chances of gain are frequently such 
that one should intelligently place a certain 
amount of one's savings, or property, at hazard. 
It is not an investment, it is simply placing 
some money for a great winning in a propo- 
sition where one's intelligence is able to indi- 
cate what the chances of a favorable result 
may be ; and the better chances predominating, 
one is justified in accepting the risk. Where 
conditions are favorable one should have found 
that the investigations confirm the claims 
made in the prospectus; that is, disinterested 
101 



102 MINING INVESTMENTS 

people have written him of the property, par- 
ticularly people living near it, in a great meas- 
ure confirming what has been claimed in the 
prospectus. Probably the reports will not co- 
incide exactly, two different statements never 
are exactly alike, but if the principal features 
have general similarity this is a very strong 
condition in favor of the proposition. 

Through his bank the investor will have 
heard that the general standing of the people 
connected with the enterprise is good, and that 
many people think well of the proposition, par- 
ticularly among those who are in a position to 
come in direct touch with it. The report may 
be that the people are of good local standing, 
but that the bank officers know nothing about 
the mining proposition; such a report can be 
considered as favorable, as the bank can at 
best only tell of local credit, and may be 
greatly misinformed in matters of technical 
valuations. 

The reports on the property under advise- 
ment will be shown on inquiry to have been 
prepared by a man who bears a good reputa- 
tion, and who has the technical skill, and the 
information gained from a good source which 
enables him to write with the authority of one 
who knows his subject. A report from a man 
who has had the technical and scientific train^ 



AND HOW TO JUDGE THEM 103 

ing, and who had later had actual and varied 
experience, so that he can speak from technical 
knowledge, and practical experience, is the 
most valuable. When this favorable con- 
dition has been found one can take the report 
and believe it; and if the mine promises well 
the report should be considered to be sufficient 
warrant for an investment. Those who place 
money at hazard pay too little attention to the 
report of a competent engineer and should in- 
sist that such a report be submitted for con- 
sideration before taking any risk in the propo- 
sition. If this were done and the records of 
those who make reports more carefully looked 
up, there would be very little money lost in 
mining. I do not wish to say that a man who 
has not been through a university, but has at- 
tained his knowledge in the School of Hard 
Experience, cannot make a report on a mining 
proposition; frequently the reports from such 
men are the most valuable ; I do say, however, 
that if a man of experience has the ability to 
pass judgment on a mining property, and make 
a report on it which may be accepted with con- 
fidence, that man will have a record to which 
he can refer, and many people will speak well 
of his ability; and if his record does not attest 
the value of his work, then his report should 
not be accepted; and it is my opinion that a 



104 MINING INVESTMENTS 

man who has simply been at mining for a con- 
siderable period is not competent to make a 
report on a mining proposition. It is requisite 
that a man should have been a careful student, 
and should have had opportunities to examine 
many different mining propositions before he 
can report successfully. We are considering 
favorable conditions, and the reports coming 
to the investor will be that the examination of 
the property has been made by a person worthy 
of confidence, both as to his integrity and his 
skill; and this being the case it is fair to put 
the proposition down as a good thing. 

Then the final matter of investigation, the 
questions as to whether the people offering 
the property, or rather who are asking for the 
use of money, are reliable and have the ability 
to obtain results. There is many a good mine 
gone wrong because the management was in- 
capable or dishonest, and the investor should 
here exercise great care in his investigations. 
If the personal credit and standing of the peo- 
ple with whom he is to intrust his money is 
good locally, in the places where they live, 
and if they have a good financial standing, 
are considered good business men and have 
placed some of their own money in the 
enterprise in which he is asked to take a 
risk; then, if it is shown by the investigations, 



ANET HOW TO JUDGE THEM 105 

that these people know what they are talking 
about, and have been in mining as a business; 
or, at least, that some of those who are man- 
aging the proposition do know mining and 
have made money at it, then the supposition 
is fair that they will be able to make still more 
money, and they being found both honest and 
capable one may expect to make money with 
them. 

All these considerations being favorable one 
is ready to take the investment, and it is only a 
question of the price which he should pay for 
the stock. It is supposed that the property is 
free from debt and the title held clear for the 
stockholders, unencumbered by liens, con- 
ditions, mortgages or obligations to be per- 
formed; because where these are found a 
strong element exists against the chances for 
success, and if the proposition is accepted with 
such incumbrances the price paid for the stock 
must be much lower than would be paid in a 
free and clear proposition. Still if the other 
conditions are favorable, a good local credit, a 
good report on the property made by a com- 
petent man; and the proposition being in the 
hands of honest, capable and experienced peo- 
ple, it certainly is favorable to take a chance 
with them, and the only question to consider 
is that of price. The investor will have made 



106 MINING INVESTMENTS 

a calculation of the present worth, that is the 
actual value of the property for cash, and will 
have compared it with the prices asked for 
similar property. He will have seen how the 
present condition of the proposition compares 
with the former conditions of other com- 
panies when they were being promoted, and 
he will have decided whether the price asked 
for the shares beyond the actual cash, or pres- 
ent worth value of the property, is too much 
to pay for the prospective values, and the ex- 
pectations. This difference is to be put into 
work in the property, and will improve its 
value, naturally so; and the proposition being 
in honest, capable hands, with experienced peo- 
ple as managers, the expectation is reasonable 
that it will be well expended, and that the in- 
vestor will obtain the benefit. But how much 
is he to make? That the money he is placing 
will benefit the property is plain enough, but 
if it benefits it only to such an extent that the 
investor simply has the value of his money, 
then there is no profit, and one goes into min- 
ing for profits. To double one's money should 
be very ordinary, to make five hundred or even 
a thousand per cent, on mining risks carefully 
considered should not be rare. If it is found 
by the investor that the expenditure of his 
money on the property is probably to im- 



AND HOW TO JUDGE THEM 101 

prove it so that he will obtain at least an indi- 
cate profit of one hundred per cent, with proba- 
bilities that it will be even more, then the 
proposition is a fair one, and he can put his 
money in against the work which has been 
done in acquiring the property, and the chances 
are decidedly in his favor. Naturally it is so, 
for if the proposition is found to have a good 
local credit; to have been reported on favor- 
ably by a competent, experienced man; to be 
in the hands of honorable, capable, experi- 
enced and trustworthy people, who under- 
stand the business; and if the price asked is 
one which admits of large profits then, where 
is the risk? In truth there isn't any, but the 
price of selecting such a good investment is 
that one should take the time and trouble to 
make the investigations. The reward will be 
a share of the great wealth made in mining, 
because the investor will, if he exercises cau- 
tion and good judgment, be certain to obtain a 
share in good propositions. One must do the 
work of making the investigations, however, 
and accept only facts, not hearsay evidence, in 
coming to a decision. 



XII 

Conditions Under Which a Mining 
Proposition Should be Rejected 

One can reject a mining proposition in short 
order, and one short chapter is sufficient to in- 
dicate conditions, any of which should be war- 
rant enough for declining to take an interest 
in such a proposition. The investorwouldprob- 
ably find a means for making inquiries through 
his bank as recommended, and would first 
learn of the local standing of the proposition, 
and the men connected with it. If word comes 
back that the proposition has a bad, or ques- 
tionable reputation, and the people connected 
with it are not held in respect among their 
neighbors, it will be very safe to let the mat- 
ter entirely alone, and refuse to invest at any 
price, no matter what inducements may be 
offered. 

Another condition which would be sufficient 
to warrant one in declining absolutely to have 
anything to do with an enterprise is, where the 
prospectus, and published reports, do not agree 
with other accounts of the property which may 

109 



110 MINING INVESTMENTS 

be had from parties living near it. Of course 
no two accounts will agree exactly, but if there 
is a decided discrepancy, and the reports 
offered by the parties interested in the pro- 
motion are very much better than any one 
else will be willing to say for the property, ex- 
aggerated and misleading statements can be 
suspected, and the trustworthiness of the 
whole proposition placed in doubt, and one had 
better be careful and have nothing to do with it, 

If it is found on investigation that the prop- 
erty is not free and clear, but is incumbered 
with debts, liens and contingent clauses affect- 
ing the title; conditions which have not been 
clearly stated in the prospectus, then fraud 
may be suspected, and certainly one would not 
want such an investment. 

If it is found on receiving the reports from 
the mercantile agencies that the people offer- 
ing the stock have been connected with ques- 
tionable enterprises, or are not of good busi- 
ness reputation, then the danger flag has been 
found and should deter any one from making 
an investment. 

The other conditions under which a propo- 
sition should be rejected are not so clear and 
will very much depend on the personal opin- 
ion of the investor. He must form his own 
judgment as to the condition of the property 



AND HOW TO JUDGE THEM 111 

when he is asked to invest, and how it com- 
pares with the conditions which were found to 
have been reported in regard to mines which 
have turned out well, but which were, of 
course, once in their prospect stages of de- 
velopment. Here one must exercise judgment, 
and must read the accounts and reports of 
mines which have turned out well, and judge 
what the prospect may be for the mine in 
which he may be asked to invest. In this the 
investor must rely very much on others, and 
must look up the record of the man who makes 
the reports recommending the property. If it 
is found that he has reported on properties 
which have aimed out badly, after he had 
recommended them; if it is found that he is a 
man of questionable reputation; if it is found 
that he is not a disinterested party, but owns 
part or all of the property he recommends, and 
his recommendation is not confirmed by others ; 
and if it is found that he had not had the ad- 
vantages of special training, or wide experi- 
ence in mining property, it will be safer not 
to risk money in the venture; especially if the 
proposition is one where ore is not much in 
evidence but it is hoped and expected that min-. 
ing operations will open up mineral deposits 
which will be valuable. 

Most mines are failures because a mistake 



112 MINING INVESTMENTS 

has been made, or expectations have not been 
realized in regard to the supplies of ore; and 
unless the proposition makes a very good 
showing and has been reported on favorably 
by qualified men the chances of losing are 
much greater than are the chances of making 
a profit. 

All mines go through a struggle to find ma- 
chinery which will treat the ores successfully, 
and often years are occupied and hundreds of 
thousands of dollars expended before a suit- 
able plant can be constructed, and profits 
made; this period of disappointment during 
the development must be expected and is not a 
reason for turning away from the enterprise. 
If, however, the investor finds that tendency 
of the management is to hurry the equipment 
before they have opened the property, and 
know how much ore they have available, it is 
well to remember that undue haste leads to 
disaster in mining. As most mining propo- 
sitions are failures, one must remember and 
study the circumstances which have brought 
about these failures, and form his judgment as 
to whether the risk shall be accepted or re- 
jected. Of the propositions offered, certainly 
the great majority are to be rejected. Of course 
one wants nothing to do with enterprises which 
are simply to sell stock and one can detect 



AND HOW TO JUDGE THEM 113 

these as noted in a previous chapter, and natu- 
rally will let them alone; still this may not be 
an important part of the investigation, because 
a scheme to sell stock in a property not worthy 
of the investment will only be proposed by 
dishonest people, and the bank reports, with 
commercial agency statements, will give the 
necessary information and enable one to avoid 
dishonest propositions. 

Then, finally, the question as to the price 
asked for the shares must be considered. The 
best mine in the world might be undesirable 
if the price placed on the shares were one 
which would not give a fair mining profit to 
the investor, and a mining profit is a very large 
profit; such shares should not be purchased. 
These are usually put in the public markets, 
and the prices advanced up, and up, to attract 
buyers; but the investor should consider only 
values and multiply the number of shares in 
the whole mining company by the price quoted 
per share, and then consider whether the mine 
is worth that much, and if the price seems ex- 
cessive let the proposition alone. 

Similarly, having deducted the estimated 
present worth, or real salable values from the 
shares, as per the formula previously stated, 
and found the difference which is the price 
asked for the prospective values ; and if this is 



114 MINING INVESTMENTS 

found to be more than the situation warrants, 
or is greater than the rate generally quoted 
for other mining properties, it is better not to 
take the proposition, because where one pays 
too much one is not likely to obtain a due 
profit. 

As to investing in companies managed by 
doctors of medicine, ministers and others, 
usually it is best not to do so, but there are 
often exceptions, especially where the manager 
has been shrewd enough to surround himself 
with competent, reliable men. 

Finally, where anything looks doubtful and 
the statements are not clear, and businesslike, 
and the managers take offense and object to a 
careful investigation when it is proposed; it 
is better not to go into the deal with them, 
because most mines are failures anyway and 
it is only by selecting the very best that one 
can expect to make money. 

In these chapters nothing is said about divi- 
dend paying mines, because one is not solicited 
to invest in such property. Established com- 
panies rarely issue a prospectus, and the specu- 
lation and big profits in mining are made by 
getting in on the new propositions which are 
desirable but cheap because in their initial 
stages of development. 

The two propositions — investment in estab- 



AND HOW TO JUDGE THEM 115 

lished mines and investment in new specula- 
tions — are so different that they must be 
treated separately. 



XIII 

Investments in Dividend Paying Mining 
Stocks 

When one considers an investment in divi- 
dend-paying mining stocks it is usually all a 
question of price ; not entirely so, however, be- 
cause it sometimes happens that widely adver- 
tised offerings of dividend-paying mining 
stocks turn out to be the worst kind of 
swindles; the dividend, so called, being simply 
repayments of a small proportion of the money 
received from the sale of stock. This is a thor- 
oughly dishonest practice and one distinctly 
forbidden by the law; it is done, however, and 
there are many subterfuges to hide the real 
character of the payment. A common form is 
for the promoters to make transactions among 
themselves which will show a paper profit and 
then declare a dividend, but in reality pay it 
only to a portion of the stock, that is to a few 
shares which they may have sold; the amount 
required is not large, because only a few shares 
have been disposed of and the stock which they 
hold really receives no dividend, the promoters 
117 



118 MINING INVESTMENTS 

sign a receipt for it, and to all appearance it has 
been paid. On the strength of this dividend 
the stock becomes salable, and presently when 
the promoters have sold what they consider 
sufficient, the stock is left to shift for itself and 
no more dividends are paid. Under one form 
or another, with better or more crude conceal- 
ment and manipulation, this game is being fre- 
quently worked, and many are defrauded by it. 
The means by which an investor can protect 
himself are very simple. If a property is really 
earning dividends active operations must be in 
progress at the mines, and accounts of sales of 
ore will be in evidence ; or returns from bullion, 
metal or mineral sales will be at hand and there 
will be some system of bookkeeping. A com- 
pany honestly managed should make no ob- 
jection to submitting proofs that its dividends 
are really earned, and where objection is made 
one can refrain from investing. The same care 
should be taken in looking up the standing of 
officers and of the enterprise itself, as would be 
taken if it were an untried speculative venture ; 
and where it is found that the enterprise is in 
the hands of questionable people it should be 
let alone, no matter how much may be paid in 
dividends, no matter how active the stock may 
be in the public markets; such activity is no 
criterion of real conditions, and may be entirely 



AND HOW TO JUDGE THEM 119 

the outcome of clever manipulations on the 
part of the promoters. There is just one thing 
for an investor to do in relation to a propo- 
sition found in the hands of people of question- 
able reputation, and that is, let it alone. 

When it is found, however, that a property 
is really in operation, and is earning dividends, 
then it may be a very attractive proposition 
for an investment, but it is all in the price. A 
mining stock should pay a high rate of dividend, 
because if an investor does not get his money 
back, and a profit out of the dividends, the in- 
vestment is a loss to him. The reason is that 
all mines must come to an end some time, even 
the greatest, and when the end has been 
reached, and all the ore taken out, the mine is 
worthless. The question is, how long can the 
mine keep on paying dividends, and how far 
away is the period when it will be worked out 
and worthless? The world is full of worked 
out mines, and as all must come to an end the 
investor should consider the end, not the pres- 
ent of a mining investment. 

If a stock is bought at a price which will 
net the investor twenty per cent, a year in divi- 
dends, the rate would certainly look attractive. 
But the rate of dividend alone is not sufficient 
to warrant an investment, one must be reason- 
ably sure that the mine contains mineral 



120 MINING INVESTMENTS 

enough to keep the dividend payments going 
for a period sufficiently long to return the 
money invested and yield a profit. At twenty 
per cent, per annum one's money will be re- 
turned in five years, at ten per cent, per an- 
num one's money will be returned in ten years, 
and at five per cent, per annum the money will 
have to remain out for twenty years before 
there is any profit, and only a few mines have 
paid for so long a period. 

It seems reasonable that a stock in an ordi- 
nary mine paying a net return of only five per 
cent, is selling too high, but that when the rate 
is between ten per cent, and twenty per cent, 
the proposition is more attractive, and more 
nearly on a normal basis of compensation for 
the risk involved. 

Dividend-paying stocks are usually not 
offered for public subscription, and most of 
them have regular quotations in the (Stock 
markets at which an investor can either buy 
or sell, and with such stocks the opportunities 
for speculation are very attractive. The mar- 
kets for such shares are rarely very broad, and 
they are for this reason extremely sensitive to 
changes of market conditions, and their fluctu- 
ations are frequently in a wide range. In 
making speculative purchases of mining stocks 
in the open markets one should be governed, 



AND HOW TO JUDGE THEM 121 

not by the fluctuations, so much as by the esti- 
mate he may have placed on the actual worth 
of the property. If one will do the work, and 
make the investigations which will give the 
true conditions at the properties he may think 
worthy of attention, and then having obtained 
the facts compare the prices for the shares 
with the average prices of similar propositions, 
and having determined the worth, the investor 
is in a position to buy whenever the prices are 
below the worth which he may have estimated, 
and sell when the price is greater than the 
worth, but always it must be remembered that 
to put money in any mining proposition where 
the management is not thoroughly reliable and 
capable is to place it at a double risk, where 
the odds are too much against the investor. 

Where a speculation develops in a mining 
stock, and it begins to assume activity, and 
move up to better levels day by day, one can 
suspect manipulation; such has been seen re- 
cently in several stocks, and one should pay no 
attention to it. By all the signs some one is 
out to unload stock on careless investors, and 
presently those who have engineered the 
manipulation will withdraw from the market, 
and go about with a broad smile, and sneer for 
the credulous, telling how they have made a 
killing. It is the same old story of the faker 



122 MINING INVESTMENTS 

at a country fair selling watches, only in a dif- 
ferent form. The faker offered watches at 50 
cents each, saying that the next day he would 
sell the same watches for a dollar and take 
back any he had sold for fifty cents at the price 
of the day, one dollar. The next day the 
watches were offered for a dollar, and anyone 
who had bought at fifty cents could get a dollar 
for his watch. The business being completed 
the faker then offered watches, as many as 
people wanted, at one dollar each, saying that 
next day he would sell at two dollars and take 
back watches at the same rate. This he did 
and then announced that next day he would 
sell at four dollars and pay four dollars for any 
watches he had sold, and people bought freely 
at two dollars. When the next day came the 
faker kept his word, took back the watches 
at four dollars, and then announced that he 
would sell as many as people wanted to buy at 
four dollars, and if they were not satisfied, 
take them back at his selling price for the next 
day, which would be eight dollars. He as- 
sured the people that his only object was to 
advertise the watches, the manufacturers 
knowing that on account of the superior qual- 
ity of the watches they would by this simple 
means of making the people handle them, and 
see their merits, secure the good will of the 



AND HOW TO JUDGE THEM 123 

neighborhood and a permanent trade. It was 
a plausible story and the people bought in great 
numbers at four dollars each. That night the 
faker packed his grip and went away, leaving 
the people stacked up with dollar watches for 
which they had paid four dollars. The sup- 
port had been withdrawn from the market, just 
as it is in fact, though in a different form, 
withdrawn from the stock market when the 
manipulator has sold out at a price satisfactory 
to himself, after spreading the report that he 
would presently be selling at a higher price, 
and would take back any stock which might be 
offered at the higher figure. In one form or an- 
other this game is constantly being played in 
the open stock market, often so cleverly ad- 
justed and concealed that the manipulation 
looks even to the best informed like a real de- 
velopment of values, but the result is always 
the same, the manipulators finally obtain a kill- 
ing, and having secured a large price leave the 
purchasers to their fate, and the market be- 
comes unsteady, flounders to lower quotations, 
in some cases goes out of sight altogether, 
and the stocks become unsalable. 

In mining stock operations there is just one 
thing to study and that is actual values ; on any 
other basis than buying when the prices are 
depressed below actual values, and selling 



124 MINING INVESTMENTS ' 

when they advance above them, one will cer- 
tainly be left in the lurch. The skill is in de- 
termining what the actual values are, and to 
do this one must make a careful study of all 
the information available. 



XIV 

The Spirit of Adventure and Specula- 
tion. What Some Have Gained 
and What Others Have Lost 

Luxurious in the metropolis lives a man 
with everything his whim or fancy can desire, 
if only the purchasing power of money can ob- 
tain it. Riches are his, gained from the mines, 
and fair fortune smiles upon his happy life. 
On the western plains is a human skull, 
bleached, and white in the sun; ghastly in the 
pale light of the moon; a toad has made his 
refuge in it secure in the silence of the desert, 
and it is nothing; the man lost his all, and his 
life was a sacrifice to fortune, he sought for 
mines and had no reward. These are the ex- 
tremes, the prize to one, the penalty to the 
other. Who goes a searching after mines? 
The spirit of adventure and speculation stirs 
always in the human soul, desire, triumph and 
achievement ; or desire, hardships and failure — 
perhaps death ; one is the penalty, the other the 
reward. Is it worth while? Perhaps, at any 
125 



126 MINING INVESTMENTS 

rate men will always take the risk, that is some 
men; and when an excited prospector presents 
himself before those who might take a chance 
with him in the property he has found, or 
thinks he has found, is it a great thing that 
one should risk a little money to test a prop- 
erty, which may have been obtained after years 
of hardship, exposure and danger. My belief 
is that where a miner who has done honest 
work, has really searched and prospected, and 
can show a record which would entitle him to 
confidence, and presents himself to people with 
capital, saying that at last he has found a 
prize, then his story should have ready listen- 
ers, and it ought not to be so hard for him to 
secure the money to prove up what he has 
found. To take a chance at first hands with 
those who prospect for mines is a most at- 
tractive form of speculation, that is, where the 
prospector has succeeded in finding something 
which promises to develop values. To grub 
stake a prospector, meaning to give him the 
supplies which will permit of explorations to 
find mineral deposits, is playing simply on a 
chance, and may or may not be good business ; 
but where the prospector has found a mine it 
is a very different proposition, and one might 
well take the risk. 

To tell of great individual fortunes which 



AND HOW TO JUDGE THEM 127 

have been made at mining is not of interest to 
our subject, we are treating of that which an 
investor could do and what he should do in 
the spirit of adventure and speculation, to risk 
a little for gains in volume. Only one must 
risk with judgment, but a risk one must take 
if one would share in the hidden wealth of 
mining regions. 

In considering what some have gained, the 
copper deposits of Michigan may have a promi- 
nent place in one's thoughts, for there are the 
accounts of how hunters and adventurers, 
years ago, brought back stories of great ex- 
posure of pure copper; some said mountains 
of pure metal exposed in the forest lands of 
the little known northern peninsula of Michi- 
gan. Occasionally people gave heed to these 
stories, most held them in derision, but those 
who gave heed sent and secured the properties. 
Then came the struggle to obtain funds and 
it is said that stock in the great Calumet and 
Hecla mine went begging for purchasers at but 
a fraction of its par. It was a struggle of some 
years, but in the end those who had ventured 
were triumphant; and rumor, on well founded 
information, has it, that some of those who 
were first to take the risk have had a compe- 
tence for themselves and for their children out 
of small amounts invested in Michigan. Surely 



128 MINING INVESTMENTS 

a good compensation for the risk. Not only 
the Calumet and Hecla but other great mines 
were developed. Then when some had secured 
the prizes a speculation developed; great was 
Michigan, copper was reported to be every- 
where, and copper companies, exploration 
syndicates and' mining enterprises sprang up 
in numbers ; people bought, and speculation 
ran a turbulent course ; but the cream had been 
secured, most of the latter propositions had no 
value and they who went a trailing after where 
others had been first, lost money, and some 
were ruined. 

This is a condition which should be empha- 
sized in one's thoughts ; the money is in the 
new discoveries, the big money; the rare re- 
turns which give a competency for a small in- 
vestment put at risk. Always it has transpired 
that where a great discovery is made a swarm 
of speculative enterprises follow after, the pro- 
moters stating that their mines are just adjoin- 
ing, or just in line with, some well known im- 
portant proposition and mining discovery. 
Wherever there is a great mine the country 
all about it will show indications of mineral; 
these in most instances do not lead to new 
mines, but simply point to the great mine 
which has been discovered. The district natu- 
rally has fame because some two or three, per- 



AND HOW TO JUDGE THEM 129 

haps more, mining companies have occupied it 
and are making great strides at uncovering 
rich ores; the press is filled with accounts of 
their great doings, the well advertised situation 
is such that any property in the famous dis- 
trict can find purchasers for shares ; the mines 
offered are just next to, or near the great dis- 
coveries, what an opportunity ! Thousands of 
late comers purchase, and lose their money. 
There is little use in trailing after a great dis- 
covery, better get in on the great discovery it- 
self, even at an excessive price, than to risk 
money on cheap trailers; but the conservative 
thing to do is to recognize that the discovery 
has been made and that others have it; then 
keep on the watch for announcements of new 
fields, and when such are first brought forward 
be quick to investigate, and if the outlook 
promises well, and is in honest hands, be 
among those who get in first. 

This condition of profit to the first comers 
and losses for all who follow after is illustrated 
in so many places that one can consider it a 
fact almost beyond dispute that profits are only 
for the early comers, generally speaking, of 
course, but in most cases it is a fact; and, 
naturally, those who get in first obtain the pick 
of anything the district may afford. In this 
there are many illustrations. A great excite- 



130 MINING INVESTMENTS 

merit was developed when gold was given 
prominence in California, and millions upon 
millions were made by those who had the first 
propositions in the different mining districts; 
and since then millions upon millions have been 
lost by others following where the first suc- 
cesses had been made. California is a great 
state and new mining districts will probably 
be discovered and then the history will be re- 
peated; good luck to those who get in first. 

Later came the discoveries of oil in Pennsyl- 
vania with millions made, and then millions 
lost by late investors. 

Then came the southern coal and iron lands 
with the same results, the iron discoveries in 
Michigan, the mining regions of Colorado, the 
copper zone in Montana, the great copper belt 
in Arizona and New Mexico, the excitement 
following the discovery of gold in Alaska, and 
the lives of thousands lost in trailing after 
those who had the prizes. Today we are having 
the splendid developments in Nevada, where 
some few great mines have made, and are 
making fortunes for the possessors, while hun- 
dreds of trailers are yapping out their wares 
and millions are being lost in expectations 
based on a supposition that mineral forma- 
tions are of such great extent that all the nu- 
merous companies must have valuable propo- 



AND HOW TO JUDGE THEM 131 

sitions. The same situation has developed in 
Canada, and will probably develop in re- 
lation to Mexican mines where some remark- 
able developments are taking place. History 
will repeat itself, a few great mines will be 
found to have enormous value, and those who 
have invested in the second rate propositions 
will find their ventures resulting in a series of 
grievous losses. 

Whatever the spirit of adventure and specu- 
lation may move one to attempt, one should re- 
member that those who have made money in 
any district have been in On the main ledge, 
the principal deposits, and that is the place 
where one should have investments if one ex- 
pects to make money in mining. 



XV 

The Mining Regions of the World and 
the Opportunities They Offer 

Having considered that in recently discov- 
ered mining regions the speculative opportuni- 
ties are greatest, the thought naturally presents 
itself as to where such locations may be, hence 
a chapter written on a great subject; which 
could occupy a volume, but seeks only to give 
an outline which may be of some service in 
that a little data, an outline of the geology of 
the world, a few statements in regard to its 
universal wealth, and of the places where 
mines are worked may give some idea of ex- 
pectations in regard to future developments. 

Certainly many changes have taken place 
in this earth during the passing of the ages of 
its development, and in spite of the many dis- 
putes among scientists and theologians, the 
brief account in the Book of Genesis must be 
considered the most logical. In the six days, 
or six periods of time, is given an outline of 
genetic development which is confirmed by the 

133 



134 MINING INVESTMENTS 

geological formations in some measure; and 
this confirmation logically connects itself with, 
and supports, that which is more obscure in 
the biblical narrative. We have only to deal 
with the days or periods since dry land ap- 
peared, for, with the appearance of land began 
the formation of mineral deposits as we know 
them. It may be that remnants of the first 
continents still exist among the Archean rocks, 
which are those of oldest formation, though it 
is more probable that all the exposure of 
Archean rocks now on the surface were at the 
first appearance of the land far below the 
original exposures ; which must have long since 
been eroded away, and it is scarcely probable 
that a single bit of the first exposure remains 
as it was when land first appeared, for all has 
changed; and during this process of alteration 
mineral deposits have been formed, and great 
stratifications of rocks to make earth's conti- 
nents have been developed. 

The oldest or Archean rocks occupy princi- 
pally the north, a great stretch of country from 
northeastern United States over into Canada, 
to Labrador and to the arctic regions. East- 
ward Archean formations occupy the northern 
part of Great Britain, Scandanavia, Northern 
Russia, the Ural mountain regions ; further east- 
ward into Siberia, among the Altai mountains 



AND HOW TO JUDGE THEM 135 

and probably portions of Alaska. A series of 
Archean formations circling the northern por- 
tions of the globe. In southern regions por- 
tions of the mountains surrounding Africa, and 
portions of the mountains in the north of South 
America are of Archean formation. Associated 
with the Archean formations are the stretches 
of pre-Cambrian developments occupying the 
same general range, and formed in ancient 
sediments and crystalline rocks developed from 
the sediments of the archean erosions. These 
are frequently found as crystalline schists of 
which the rocks in New York City may be 
taken as a good example. Associated with the 
pre-Cambrian are many ancient mountains and 
a great portion of the uplifted ranges of eastern 
United States, and some portions of the Rocky 
and Andes mountains which were then prob- 
ably a series of islands. Portions of the moun- 
tains of Central Europe are probably pre- 
Cambrian, and a large part of the mountains 
surrounding Africa may be referred to this 
period, and probably a series of islands were 
then developing along regions now occupied 
by the great mountain ranges of Central Asia. 
The sea was retreating then as it is retreating 
now, but in pre-Cambrian ages there were only 
a series of islands appearing above the waters. 
Following the pre-Cambrian came the Cam- 



136 MINING INVESTMENTS 

brian, and all the periods of the Paleozoic Age, 
during which the first forms of life were de- 
veloped and land in greater extent appeared 
above the waters. The great regions of north- 
ern United States and lower Canada, the Lake 
regions, great portions of the Andes and Rocky 
mountains, portions of the mountains of Brazil, 
great stretches of Asia, and large areas of Cen- 
tral Europe and nearly all of Africa may be 
referred to this age. In similar formations 
came the Mesozoic, during which there were 
mountains intrusions and the building up of 
landed areas around those all ready formed; 
largest development taking place in Europe 
with perhaps the completion of the continent 
of Africa to very much its present dimensions, 
for Africa is an old country, the oldest con- 
figuration and the least altered surface which 
the earth has developed. 

After this in the later ages of the Mesozoic 
came the beginning of the vast plain and table 
land formations of America and Asia, and its 
termination in a great series of terrestrial con- 
vulsions, and the breaking through of all the 
great ranges of the Andes and Rocky moun- 
tains forming the table lands of America, the 
mountains of Europe and probably of south- 
western Asia, with Africa remaining tranquil 
and undisturbed. Following this came the 



AND HOW TO JUDGE THEM 137 

Cenozoic development of the basins of Europe 
between the mountain systems and the plains 
of America, Australia and Asia adjacent to the 
lands, which had appeared in the section of the 
north. Great convulsions were developed dur- 
ing this era and many volcanoes appeared, 
some of them continuing even to our day. To 
this era belong the uplift of the Pacific coast 
ranges of the United States, the islands of the 
far Pacific, the volcanic formations of the East 
Indies and Japan; with the mightiest move- 
ment in the uplift of Central Asia and the 
Hymalaya mountains where the greatest and 
perhaps the most recent mountain systems of 
the world lie little known, and as yet scarcely 
explored; and Africa still undisturbed calm in 
its development, the surface then as we know 
it now, except that probably the great desert 
wastes were fertile lands, for at that time the 
continent had perhaps only begun to show 
signs of drying up because of its great age. • 

Then in the Quarternary, the last age of the 
Cenozoic era brought the formation of coastal 
plains, the savanna lands, the selvas of the 
Amazon, volcanic islands in the Pacific, the 
European low coasted regions, the pushing out 
of the delta of the Ganges, and all the borders 
of the open lands of China; and with the cul- 
minating age of the Cenozoic came the era of 



138 MINING INVESTMENTS 

man, and soon began his delving after minerals 
in the earth. 

In the older countries of Caucasian domina- 
tion the mineral deposits are well explored, 
some of them, notably, the tin mines of Corn- 
wall, and the copper mines at Rio Tinto, Spain, 
having been occupied since Roman days; and 
there are many, such as the coal and iron mines 
of England, Germany and France; as well as 
many other properties, which have been oper- 
ated for long periods, and are monuments of 
splendid engineering and metallurgical prac- 
tice. 

It is hardly expected that in Europe discov- 
eries of new mineral deposits will be made, for 
those regions have been very completely exam- 
ined; always something new may be looked 
for, but the speculative possibilities are cer- 
tainly not very great. A short time ago, how- 
ever, important iron and coal seams, hereto- 
fore unknown, were discovered in England, 
and promise to be of unusual importance. 

Among the formations as developed in 
Europe we find the Archean mostly unproduc- 
tive, excepting only in Sweden and Norway, 
where there are important iron deposits; but 
many of these are re-deposited formations, 
found in the bottoms of the lakes where iron 
has collected from the surounding country. In 



AND HOW TO JUDGE THEM 139 

the Urals there are mines, of which the plati- 
num deposits are famous, and various gem 
stones, with some gold deposits which attract 
attention. Probably in the Ural regions min- 
ing discoveries may result in the development 
of important enterprises, for the country has 
been little developed. 

In the pre-Cambrian regions and among the 
intrusive older mountains of Central Europe, 
both pre-Cambrian and Paleozoic, there are 
found silver and rare minerals with some gem 
stones; and then the Mesozoic with the coal 
and iron mines of England; and the Cenozoic 
with the coal and iron mines of Germany and 
France, and the great basin formations contain- 
ing the clays and earths on which so many 
European industries are founded. These basins 
have been pretty thoroughly explored, ex- 
cepting only the great Russian basin be- 
tween the mountains of Central Europe and 
the Ural regions; and under this basin expec- 
tations are entertained, by some, that great 
deposits of coal, iron and petroleum will be 
found. In Spain there is the fragment of the 
Archean and eastward along southern Europe 
is the Mediterranean basin with its volcanic 
formations and few mineral deposits. Europe 
is not a place of great mineral enrichment; and 
perhaps the great mysterious continent of Asia 



140 MINING INVESTMENTS 

may also be found but poorly endowed com- 
pared to other regions of the earth. Yet the 
wealth of Asia is proverbial, the splendors of 
her rulers, the crushing poverty of her hoards 
of population; but recent investigation has 
advanced the theory that the accumulated 
wealth is not so much that the mines are very 
rich, but that many hands are available to 
gather what there is. However this may be, 
Asia presents a field for mining enterprise and 
speculation to which eager eyes are turned. 

Attention has been attracted to the gold 
mines of Siberia among the Altai mountains; 
mines worked by bleeding convict hands, and 
with such cheap labor, yielding returns which 
are notable ; yet perhaps, worked under another 
system the Siberian gold mines would not yield 
so great a profit. Of the Paleozoic and Meso- 
zoic regions of Asia little is known, and among 
these formations where the intrusive moun- 
tains have broken in their gradual uplift, es- 
pecially along the Hymalayan regions where 
both Paleozoic and Mesozoic formations are 
found, precious stones, and precious metals 
may be had ; and rumor has it that in the lands 
over toward Thibet there are many gold de- 
posits, and in these regions, and in the moun- 
tains to the westward through Persia, enter- 
prises and speculations may develop, and the 






AND HOW TO JUDGE THEM 141 

regions are worth watching. Among the Ceno- 
zoic plains and lands and the rolling hills of 
China, coal and iron deposits are reported, 
copper is had, and here elements for great 
speculations are at hand, and the opportunities 
for entering upon them are often discussed. 

Among the Cenozoic mountains, the great 
uplift of the Hymalayan, which have in com- 
paratively recent times broken through during 
a steady upheaval among the older formations, 
there are reports of mineral deposits, but little 
is known, though, as previously stated, in the 
Paleozoic and Mesozoic regions of northern 
India and Indo China, over toward the base of 
the Hymalayan, mines of gold and precious 
stones exist, and developments may follow 
which will result in a wide speculation. 

Of the older continents none are, perhaps, 
better endowed with minerals than Africa, 
ancient regions where the surface has been 
so little disturbed that it may be considered the 
oldest in all the earth. Here perhaps the great- 
est developments are to be made, greater, it 
may be, than those which have been in oper- 
ation in these latter years; for the vast in- 
terior of Africa is scarcely known, and reports 
come that every mineral is there to be found. 

From among the outer mountains of the 
north reports of rich deposits come at times, 



142 MINING INVESTMENTS 

and also from the great interior desert; so 
ancient that it has dried to an appalling deso- 
lation. In the broken country further south, 
after passing the great interior jungled plains 
are other regions whence come the stories of 
mineral wealth, and further south the Rand, 
with all its celebrated mines, commands atten- 
tion; surely Africa presents a place for mining 
possibilities, and one should watch for oppor- 
tunities. 

Easterly from this ancient continent, across 
the Indian Ocean, are all the island regions, 
and Australia; recent formations in most in- 
stances, among which, at places, important 
mineral interests have developed, and others 
are expected. 

Australia has her outer fringe of mountains 
and great interior plains like Africa, but not 
of such antiquity, though Paleozoic forms are 
found and crystalline rocks attest older places 
of formation. In the south and west are the 
gold mines which have attracted the attention 
of the civilized world, and have made some 
magnificent fortunes. Coal and iron deposits 
are known, the coal being in abundance suf- 
ficient to be of economic importance, and the 
copper mines are worthy of consideration; the 
precious stones also are important, and have 
afforded a considerable revenue.: Here, a min- 



AND HOW TO JUDGE THEM 143 

ing speculation has been long in active oper- 
ation, and further favorable discoveries may 
still be expected. 

North and eastward from Australia are all 
the many islands of the Pacific. In most in- 
stances the formation is volcanic and the 
islands may be generally considered of recent 
origin, that is recent compared to Africa and 
certain portions of America. Among these 
islands it is said that every known mineral is 
to be found, but beyond the reports we have 
little of information, and the places are so 
afflicted with savage people, and the dangers 
are so great, that probably mineral explora- 
tions will be much retarded. In the Philippine 
Islands are found great stretches of stratified 
conglomerates, gravel beds turned to stone; 
extensive lime stone formations; lava flows; 
older crystalline, and schistose rocks; the con- 
figuration indicating places of recent geological 
origin. Reports of mineral deposits have been 
circulated, but though a speculation started up 
at one time not long ago, apparently it has died 
away and the mineral deposits of the Philip- 
pines are perhaps not so important as had been 
anticipated. 

Further north are the Islands of Japan, vol- 
canic, mountainous and of a teeming popula- 
tion. Here there are minerals, coal, iron and 



144 MINING INVESTMENTS 

copper, the later being of such great import- 
ance as to be a factor in the world's economy. 

Then eastward, and to the north, is that 
great mining region Alaska, whence for years 
came reports, and stories of golden treasure 
accumulations, which scarcely were believed; 
till suddenly a blaze of enthusiasm followed a 
greater discovery, and to that far country in 
the north went thousands, and money poured 
in and gold came out. A region of ancient for- 
mations and volcanic intrusions, plains well 
worn down, scoured out valleys and denuded 
hills; with gold and copper, coal, iron and all 
minerals calling for exploitation ; and probably 
in Alaska there will be developments to en- 
rich, as great as any which ever have been irt 
all the world. 

Following down to the south, a great range 
of mountains stretches along the coast where 
explorations have as yet not been of great ex- 
tent, and where mineral deposits may be found, 
which will be of great importance ; and it seems 
a country certainly worth watching, for here 
some great discoveries are anticipated. The 
whole Pacific system of mountains from the 
northern Arctic to the Antarctic regions in the 
south is mineral bearing so far as it has been 
explored, and there is reason to believe that 
this but little explored portion of the range 



AND HOW TO JUDGE THEM 145 

will be mineralized the same as all the other 
ind better known sections. 

Eastward of these little explored portions of 
the great Pacific ranges are all the Mesozoic 
and Cenozoic plains of Canada, where coal, 
iron and petroleum deposits are expected; and 
then we come to the older metamorphic re- 
gions of middle Canada, where among pre- 
Cambrian rocks, intrusive gabbros and tric- 
linic feldspar formations are the seams of silver 
bearing ores, copper impregnations, and great 
accumulations of pyrite ores which are now 
attracting a wide public interest. 

North and westward from these are the little 
known Archean regions of Labrador. There 
mineral discoveries may be expected, and this 
is a region well worth watching. Southward 
along the coast and its adjacent country we 
have the schistose, the mica bearing, the gran- 
ite and intrusive rocks of ancient periods; ex- 
tending down into the United States a great 
reach of country mineralized, irregularly how- 
ever, so far as gold and precious metals com- 
mand attention; but the iron, coal and pe- 
troleum deposits of the Paleozoic are perhaps 
here the greatest in the world. Southward are 
other coal and iron regions and then westward 
across the middle country with its hills and 
prairies are regions underlaid with coal and 



146 MINING INVESTMENTS 

petroleum and with lead and zinc; and then 
come Cenozoic plains, and after that the Rocky 
Mountain regions ; place of activity and mighty 
enterprises. The great semi-desert country 
with its intrusions bearing gold formation, the 
copper mines extending in a great range along 
the inner mountains, mineralized at intervals 
well up into Canada and far away to the South 
into Mexico. Then the coast mountains and 
the great gold and mineral bearing regions 
among the slaty schists from Washington 
down through Oregon and California to Mex- 
ico. Here is a vast mining region, and in all 
the country of the western lands new discov- 
eries may be expected ; and all that vast region 
is worthy of careful and intelligent watching. 
In Mexico where the mountain ranges comes 
together there is a veritable treasure land, and 
here mineral developments are such that the 
country is worth the most careful and serious 
attention; in fact the prospects are so great 
that no mining proposition should be presented 
from that country but it should have the most 
careful and serious attention. All through the 
mountains of Mexico there are deposits of 
gold, silver, copper, lead and every kind of min- 
eral; the great plain of the central uplands, 
and the mountain ranges on either side, in 
fact wherever a broken country is found in 



AND HOW TO JUDGE THEM 147 

Mexico there mineral is to be expected. The 
great rock formations of that country are of the 
Mesozoic era and through these rocks intrusive 
uplifts have taken place in Cenozoic times and 
in these broken regions there is mineral, equal 
to the mineralization of any other portion of 
the earth. Southward volcanic regions are 
reached, principally noted for gold deposits, 
and farther south are all the volcanic develop- 
ments of Central America, a place where min- 
eral deposits are so rich that the attention of 
the civilized world has been attracted. Here 
is a great mining country, where difficulties al- 
most unsurmounted beset the miner, where, 
however, some notable successes have been 
made, but it is in many instances a waiting 
game, one which in the end will give sure win- 
nings; waiting now for those who take inter- 
ests in cheap stocks of companies owning great 
and valuable mines, but situated where con- 
ditions are adverse for operations, and develop- 
ment must be slow, and patience is required. 
South of Central America and the Isthmus the 
great, little explored continent of South Amer- 
ica is filled with mineral regions. Conditions 
are similar to those in Central America; mines 
rich in such wealth as is hidden in but few por- 
tions of the earth. All the great ranges of the 
Andes are mineralized from the gold fields of 



148 MINING INVESTMENTS 

northern Colombia, where, in the low laying 
placer deposits in the rivers and in the veins 
among the mountains there are such great ac- 
cumulations of gold that it is difficult to de- 
scribe the treasure. An old miner visiting 
those regions said on returning, "The whole 
country is just louzy with gold." And this well 
describes the accumulations. Southward along 
the Andes are the gold, silver and copper mines 
of Peru, the vast mineral deposit of Chili, 
where copper is in almost every mountain ; and 
east of Chili the fabulous wealth of Bolivia, 
where among the older Paleozoic formations 
and the adjacent regions every known mineral 
may apparently be had, and gold, silver, tin and 
copper are of such abundance that almost the 
whole country lives from the product of the 
mines. 

Along the eastern exposure of the Andes, 
occupying Mesozoic bordering on Cenozoic re- 
gions from Colombia southward, there is a 
little known, scarcely explored territory of vast 
extent where rumors of mineral wealth un- 
known reaches from time to time the outer 
world ; but on one side deep forests, and on the 
other towering mountains block the way to a 
country where there are indications that ore 
deposits as rich as any in the more accessible 
portions of this great range of mountains will 



AND HOW TO JUDGE THEM 149 

be discovered. This range of lofty mountains 
with its intrusive masses, towering volcanoes 
and exposures of older sedimentary rocks, both 
the eastern and western slopes, and in fact all 
the Andean ranges occupy a country which 
should be watched and mining propositions 
from those regions should receive careful con- 
sideration; even the little known territory of 
Patagonia is worthy of attention, and some re- 
ports of truly remarkable mineral deposits 
have come from that far off and litte explored 
country. The plains of Argentine, and of the 
selvas of the Amazon offer little prospect for 
mineral, though coal and petroleum may be im- 
portant, for there are indications worth ex- 
ploring which are frequently reported, especi- 
p'oring which are frequently reported, especi- 
ally in those portions of the plains and selvas 
nearer the Andean ranges. 

In the great uplands of Brazil, of ancient 
formation, are the well-known diamond de- 
posits with gold and rare minerals, offering 
an attractive field for exploration, and ac- 
quisition. These mountains are broken by in- 
trusions of more recent development and often 
mineral bearing, but are most celebrated 
for their diamond deposits. North of these 
mountains come all the swamps of the 
Amazon, a vast stretch of country where no 
mining interests can be expected, but further 



150 MINING INVESTMENTS 

north and bordering, one side on the swamp 
country and the other side on the Caribbean 
Sea, is a vast region of ancient mountains, in 
the Guiana, Venezuela and eastern Colombia; 
here among the ancient schists there are gold 
deposits, and in the gravels accumulated from 
them are placer mines, which have become 
celebrated. In these regions every mineral 
may be expected and there is good reason why 
one should keep watch of discoveries and offer- 
ings made from this section. Accessible it is, 
but there are many difficulties and slow de- 
velopment must be expected, especially in 
Venezuela where till the political conditions 
improve it is hardly safe even to own property. 
In Colombia the conditions are very different, 
and the universal testimony of those who own 
property in that country is that titles are safe, 
and property is protected even during revo- 
lutions; hence from Colombia one can watch 
with special interest for reports of mineral dis- 
coveries, and anything from that country in 
the form of mining propositions deserves care- 
ful consideration. 

The Caribbean regions, the West India 
Islands, north of South America are mostly 
but poor in mineral deposits, though in Cuba 
there are some great mines; but also many 
smaller deposits which may be the cause of 



AND HOW TO JUDGE THEM 151 

serious loss; yet Cuba presents some very at- 
tractive propositions, and offerings from that 
country should be investigated. Reports say 
that Hayti and the Dominican Republic are 
rich in minerals; these Republics are of appar- 
ently of the same formation as Cuba, intrusion 
hills, limestone accumulations and clay plains, 
with, it is reported, mineral developments 
among the mountains. 

In this chapter the principal mining regions 
of the world have been given in brief outline, 
and among some of them indications are such 
that reports of mineral discoveries should be 
watched; but a wise investor, knowing how 
great an opportunity may be had through in- 
vesting in a mine, will investigate every propo- 
sition which may be presented to him from 
whatever region; and if he investigates with 
proper care he will in time obtain some ac- 
quisitions which will compensate for all the 
labor expended on the many propositions from 
all parts of the world which he must study and 
reject in order to obtain one good mining in- 
vestment. 



XVI 

The Mining Regions of the United States 

An investor in mining stocks, an intelligent 
investor who studies a proposition, and has an 
established system by which he weighs the 
merits of the opportunities presented to him, 
may surely consider all the mining regions of 
the world, for with honest men in the manage- 
ment one's money can be sent anywhere, pro- 
vided the inducement is good enough. To the 
majority of people the propositions offered 
from one's own country naturally seem the 
most desirable. To us mining in the United 
States is the most attractive, and money is sent 
abroad with some reluctance ; yet we know that 
our country is well explored, and that great 
discoveries are more probable in distant places 
than they are at home. However that may be, 
our own country is one of those best endowed 
with minerals, and many important develop- 
ments are certain to animate our future, in 
which those who participate will reap a rich 
reward; that is those who participate intelli- 
gently, and investigate before they take ths 

153 



154 MINING INVESTMENTS 

risk; not everybody who chances a venture 
without investigating may expect a reward. 
Certainly where such expectations are enter- 
tained a review of our mineral regions should 
be of interest. The United States produces 
every known mineral used in the arts or 
industries, some in but an inferior volume, 
yet every known useful mineral is found; 
and the wealth of our mines "runs into the bil- 
lions, and millions of people are participating 
in them, some only as wage earners, but all are 
participating; and so great are our mineral re- 
sources that it may be said that every life in 
the United States is to some extent influenced 
and benefited by, if not directly dependent on, 
our mining industries. 

Mineral developments are found from one 
end of our country to the other. In the 
Archean formations of New England among 
the rough hills and ridges of Maine, New 
Hampshire and Vermont, there are seams 
among the rocks, at places, carrying lead sul- 
phides with silver; and iron with sometimes 
copper sulphides carrying gold. These de- 
posits have not been prolific, are generally of 
irregular formation and are probably not per- 
manent. Some mines may be discovered 
which will be profitable, but the region is not 
one to encourage expectations. From this re- 



AND HOW TO JUDGE THEM 155 

gion down through Central New England, 
through New York and Northern New Jersey, 
we have a composite country where there are 
Paleozoic formations; metamorphic or altered 
rocks, in which the character has become com- 
pletely changed; intrusive dykes of dark 
igneous rocks, some of them of great width, 
others only narrow cracks through which the 
heated material has come to the surface and 
cooled to form a narrow dyke of dark colored 
rock; and there are areas of Archean rocks. 
Among these formations the characteristic 
mineral is iron, and some very great mines 
have been developed. Near some of the 
igneous intrusions there are copper deposits 
which have attracted attention. Lead sul- 
phides are found at places, graphite exists 
among the metamorphic rocks, but is valuable 
only at one or two localities in northeastern 
New York. It is the iron which is of principal 
importance in this formation. The mines at 
Sterling Furnace, New Jersey, producing iron, 
manganese and zinc have had an enviable rec- 
ord since Revolutionary days. In New York 
there are some important mines latterly eclipsed 
to a great extent by the vast deposits of Michi- 
gan. In the Adirondack mountains there are 
enormous deposits of iron, but these deposits 
contain a high percentage of titanium and are 



156 MINING INVESTMENTS 

not available in modern furnace practice. 
Titaniferous iron ores can be smelted, but 
it costs too much, hence these enormous iron 
deposits are not worked; but they present 
great possibilities, and should be watched by 
investors in mining stocks, because some day 
they will be used and perhaps produce great 
fortunes. 

In western and central New York the Paleo- 
zoic formations are extensive and but little dis- 
turbed. Here minor products, gypsum, talc 
and salt in great abundance, are produced. 
The salt mines are of decided importance, but 
there are small chances for successful specu- 
lations in new salt mines, the present output 
being more than adequate. To the south of 
New York we have all the Paleozoic regions 
of Pennsylvania containing a wealth of min- 
eral deposit, the like of which the world has 
not in any other region. Here the coal and 
iron deposits represent a wealth equal to that 
of an empire. Other minerals are found, lead, 
zinc and copper; but these are overshadowed 
by the mightiness of the coal and iron. Pe- 
troleum has been and still is, a product of the 
highest value in Pennsylvania, and great 
wealth is annually produced. This is an old 
mining region, and expectations that discover- 
ies will be made, in which one can participate 



AND HOW TO JUDGE THEM 157 

at a low rate during the first stages of develop- 
ment, are hardly to be encouraged. Mining 
investments in Pennsylvania are, however, on 
a sure foundation, and represent stability in 
which one might well seek to participate. 
Southward from Pennsylvania extensions of 
the Appalachian Mountains continue in a splen- 
did series through Maryland, Virginia, West 
Virginia, Kentucky, Tennessee, Western North 
Carolina, Northern Georgia and Northern Ala- 
bama. A splendid region where at intervals 
mineral formations of great importance occupy 
extensive areas. These mineral developments 
are notably coal and iron, the latter occuring 
in deposits of great importance in the southern 
portions of this region, especially in Alabama. 
Other areas are also of importance, particularly 
in Tennessee and West Virginia. Coal is 
abundantly developed adjacent to the iron and 
the region presents many features which favor 
industrial development; and coal and iron 
propositions from the lower Appalachian re- 
gions deserve careful attention. Other min- 
erals and products are also important; the pe- 
troleum wells of West Virginia, the copper 
mines of eastern Tennessee and over into the 
adjacent states, the gold mines of Georgia, and 
the manganese deposits in the southern outer 
portions of this formation, all present oppor- 



158 MINING INVESTMENTS 

tunities some of which are worthy of atten- 
tion; but there are many ore developments of 
these minerals which have been disappointing, 
and the region is most notable as a place where 
coal and iron interests command and should 
receive special attention. 

Easterly and south of all this region are the 
coastal plains of the Atlantic and Gulf States, 
a region favored in agricultural rather than 
mineralogical advantages; however the clay 
deposits are of more than passing importance, 
and the phosphate beds of the southern coast, 
and in Florida are of great value ; hence propo- 
sitions from this region offering participation 
in clay deposits, or phosphate beds may be 
worth looking after. 

Westward from the Appalachian, and the 
Paleozoic formations of western Pennsylvania, 
the great middle country opens out, Paleozoic 
and Cenozoic formations predominating, with 
also regions where the Mesozoic or middle life 
era, is in strong development. Here we have 
the great expanse of bituminous coal mines 
occupying Ohio, Indiana and Illinois; and in 
the coal country or adjacent to it important 
petroleum deposits are buried deep below the 
coal beds. These are propositions worthy of 
investigation and if a new enterprise is brought 
forward it should receive consideration. 



AND HOW TO JUDGE THEM 159 

Through the centre of this vast region is the 
Cenozoic valley of the Mississippi where min- 
eral developments are not at present known, 
but on either side of it are the great lead and 
zinc regions of Wisconsin, Illinois, Iowa, Mis- 
souri and Arkansas, a great stretch of coun- 
try where some most excellent results are be- 
ing obtained. In fact, so satisfactory are the 
profits from these lead and zinc mines that 
rarely are general investors asked to participate 
as subscribers, and when propositions are 
offered they are worthy of every consideration, 
and where they are found in honest, capable 
hands, they should be accepted. Further to 
the west in this great interior region are 
the oil fields extending from Kansas south- 
ward to the plains of Texas; deposits of 
petroleum which have made some great for- 
tunes, and many most unfortunate losses, pre- 
senting conditions which while making them 
worthy of consideration, should yet be looked 
upon with caution. North of this great in- 
terior region are the mineral deposits of that 
wonderful territory occupying a zone in north- 
ern Michigan, Wisconsin and Minnesota. 
Here are iron deposits great in extent and bear- 
ing accumulations of ore not excelled in all the 
world; and in one restricted area in Michigan 
are the most famous copper mines. So cele- 



160 MINING INVESTMENTS 

brated has this region become that many 
inferior projects have, because of the fame 
of their surroundings, been given credence and 
much money has been lost in mining specula- 
tions; for which reason propositions from this 
country should be carefully weighed and 
accepted only on ample proof of merit. 

Westward of all the great interior country 
in mighty ranges are the Rocky Mountains re- 
gions of speculation, resulting in both fortunes 
and most unhappy losses ; whence always there 
are propositions sending out appealing calls 
for help. The capitalization of the Rocky 
Mountains mines is estimated in the billions, 
and the region is so rich that the capitalization 
may not be excessive. Numerous mining 
camps and even great cities have been built up 
on the products of these ore deposits, and 
every mineral of economic importance is to be 
found among the Rocky Mountains. Of the 
mining regions there are the Black Hills ad- 
jacent to the Rockies, where gold deposits are 
famous, and tin mines have attracted attention ; 
there are the great copper and silver mines of 
Montana at Butte and the silver lead ores of 
Wyoming at Coeur d' Alene, and adjacent re- 
gions. In Utah and Colorado a great belt of 
silver lead ores is located in the carboniferous 
lime stones, and found at intervals forming 



AND HOW TO JUDGE THEM 161 

important mining regions. Occupying the 
interior of Colorado among intrusive dykes 
and ledges, are wonderful gold mines in 
splendid series, from which millions have been 
and are being taken. In the southern regions 
there is the great copper belt across Arizona 
and New Mexico, a splendid mining country 
rich in gold, silver and numerous minerals as 
well as in its wealth of copper. Surely a won- 
derful mining region is presented in the Rocky 
Mountain ranges, a place where fortunes can 
be made and lost, and speculation will always 
be in evidence. So great a region as this 
should receive a very careful study, but propo- 
sitions must be accepted with care, the wealth 
is at hand, but there are many dangers and un- 
certainties. 

Westward still further is the basin region of 
the United States, a series of low plains and 
mountain ridges where in these days great dis- 
coveries of mineral bearing ridges have been 
made, and hundreds of enterprises are offering 
their attractions, particularly in the Western 
portion of Nevada over against the Sierra 
Nevada mountains. Here a great mineralized 
reach of country has been, and is being opened, 
and some splendid fortunes have been made. 
These mines of Nevada are apparently de- 
veloped through the influence of intrusive 



162 MINING INVESTMENTS 

dykes, and probably a broader influence tend- 
ing to ore formation will be found to have 
originated with the uplifting of the great 
ranges of adjacent mountains. It is probable 
that the mines of Nevada are deep and promi- 
nent, and those who have ownership in the 
greater propositions may consider themselves 
fortunate, and those who would place money 
in mining should give careful attention to this 
great region where gold and copper are in such 
abundance; but to pick a winner from among 
all the mass of offerings will require skill, and 
judgment of no mean order. 

Beyond this region of Nevada and the great 
basin lie all the Pacific mountain ranges where 
gold predominates, a great series of elevated 
ridges from the northern limits of our country 
to its southern boundary. There in the slaty 
metamorphic formation, dark colored rocks 
extending down into the earth are veins, 
ledges; and, developed from them gravel beds, 
rich in gold. Here the greatest mining specula- 
tion the world has ever known was once in 
operation, and the millions made and lost in a 
few years are still remembered; and even now 
from this region many good propositions are 
presented worthy of the best acceptance. 
Many others must be considered worthless, and 
the Pacific gold mining regions, while offering 



AND HOW TO JUDGE THEM 163 

some most attractive opportunities, is also a 
place of many speculative ventures; not in 
gold only, but in many other mining propo- 
sitions, for this region is well endowed with 
all minerals, and offerings from here should 
be carefully scanned and care taken, extra 
care, to choose the winners. 

This is but a brief outline of the mineral re- 
gions of the United States, but enough to show 
that this land of ours is so abundantly en- 
dowed with ore deposits that the products of 
our mines represents one of our principal, and 
perhaps our most important, national resource ; 
and in this wealth a careful investor should 
have participation, and great profit, 



XVII 

On the Trail With an Honest, Compared 

With the Work of a Dishonest 

Prospector 

There is something fascinating in the search 
for mines, all the beautiful open country, the 
mountains, valleys, splashing streams, the arid 
lands, even the burning deserts are calling to 
the stalwart that they come and find the hid- 
den treasures. No hunter pursues his quest 
with energy greater than the prospector, no 
sport is equal to the keen enjoyment of a cam- 
paign searching through little explored places 
for mineral treasures. 

A good prospector is a man not only well 
informed as to mineral developments, but one 
who is at home on the mountains, in the for- 
ests, or on the plains, knowing all the craft of 
the woodman; and if our sportsmen from the 
cities wish to see something of what real open 
air life is they should go for one or two cam- 
paigns, grub staking a good prospector, and 
accompanying him to the field look for some- 

165 



166 MINING INVESTMENTS 

thing worth while, and give up for a time kill- 
ing things just for fun. 

The trail is one which will tax the stoutest, 
the prospector is eager and the way is in the 
lonely unfrequented parts. The traveling kit 
is light for one must go far afield, and while at 
first discomfort may be felt, it is only for a few 
days ; and presently the wander lust dominates 
the soul, strength of freedom has mounted to 
one's heart, the limbs are supple, the wind 
blows in one's face and goes romping away 
among the trees, over the rocks or across the 
plains; and one is free as the air, and always 
the wanderer is spurred by expectations, a 
hope that never fails to excite to energy. With 
the early morning while the cool is yet in the 
air, perhaps before the sun has come, the pros- 
pector is bestirring himself. His simple break- 
fast is soon prepared, coffee, and pancakes, 
with probably some game if he is in a fairly 
fertile country; for in little frequented places 
there usually is game of some kind. Then if 
the prospector has a good grub stake, his jacks, 
as miners call their donkeys, are packed and 
the day's work has begun; a tramp along the 
mountain sides usually near the base. While 
so occupied the prospector keeps watching out 
for float, that is bits of rock, containing min- 
eral which may have been carried down the 



AND HOW TO JUDGE THEM 167 

mountain. Frequently he stops to examine the 
rocks, or scan the outlines of the country. The 
water courses are examined because the gravel 
might contain pebbles from an ore deposit, and 
this would indicate that somewhere up-stream 
the water had cut through a mineral bearing 
formation. The prospector has little to say, 
there is too much for the eyes to consider and 
the tongue may not be loosed. The companion 
must learn to observe, commune with the 
spirit of the wild country and be content. 
While prospecting one is on the lookout for 
game, and it will be a poor morning's work in 
any but the bad lands, or barren countries, 
which does not give something for one's din- 
ner. The dependence on game becomes a sort 
of natural condition, or perhaps the instincts 
of former lives long dormant become keen 
again; and, usually when noon comes, and a 
convenient place is found camp is made, a 
supply of game is ready to be cooked. Here 
it is a feast, the searching is forgotten for a 
time, and stories and good fellowship are com- 
bined with rest and plenty, and it is good to 
be alive. Then the long march is resumed, 
tramping on and poking about, and so all the 
day is probably passed. At night a place to 
stop is prepared, the jacks are tethered and 
soon the prospectors are asleep, often with no 



168 MINING INVESTMENTS 

covering but a stout blanket and the distant 
vault of night. Such sleep comes only in the 
open after a day of vigorous effort, one will 
remember always, and long years after will 
want to go again. And so the wandering on 
continues; sometimes the way is comforatble, 
and pleasant, the surroundings a delight, the 
life a happy exploration ; at others the way be- 
comes rough and hard, perhaps even perilous; 
and sometimes wandering in arid countries the 
way is lost, and suffering, real suffering, beset 
the way; it may be that after hardships one 
comes out safely, but perhaps it is not so, and 
suffering continues into agony, and all is ended 
in a little while, and presently another human 
skeleton is bleaching in the sun. Such dis- 
asters are rare, and fortunately most prospect- 
ing trips are outings of real pleasure, a life of 
open air and sunshine, while the travelers 
search and search and sometimes find a great 
reward. For days the traveling on continues, 
and then signs of mineral are encountered and 
the way becomes exciting, dreams of wealth 
come unbidden, for the indications are sug- 
gestive of a treasure located somewhere near. 
Now a camp is made more carefully, the out- 
look is sufficiently favorable to warrant that 
some days should be passed in the vicinity. A 
careful search is commenced, the prospectors 



AND HOW TO JUDGE THEM 169 

working up the mountain sides, following the 
streams and hunting about among exposed 
ridges. An honest prospector does his work 
thoroughly, and leaves no spot unexamined; 
but a dishonest man will take some of the float 
which may carry mineral, stake out some 
claims and with exaggerated reports seek the 
cities, or return to those who had sent him 
with stories of a great discovery; and, obtain- 
ing money, will live at his ease for a time, and 
then go back to his "great discovery," collect 
some float together, open a shaft at some con- 
venient point, and then send reports of 
progress; perhaps even a company may be or- 
ganized, and presently there is another mining 
enterprise in which investors who are too lazy 
to investigate for themselves have lost some 
money. 

The honest prospector is not content with 
signs of mineral, his work is earnest, and in- 
telligent, and by following up the signs he, 
after some days of labor, comes on the ore de- 
posit, the place from which the broken float 
had been eroded ? and, mingling with other ma- 
terial had washed down the mountain side. 
Probably it is not important because most ore 
deposits are not important, but after taking 
specimens the dishonest prospector would 
make a location and go back with stories of 



170 MINING INVESTMENTS 

untold wealth; and there are many dishonest 
prospectors, though perhaps most of them are 
only foolish. It is evident that a mineral 
country has been reached, and the permanent 
camp where the first signs were found being 
comfortable and convenient, it is made a base 
of operations. With lighter equipment the 
prospector now visits in rapid succession the 
different surrounding points which may prom- 
ise to hide mineral deposits. It is a game of 
search, continued search, with always the hope 
of a great prize which may be waiting, and 
there is excitement for, as the work continues, 
other little deposits of ore are found; if it 
were not a mineralized country these would 
not be encountered, there must at some adja- 
cent place be a greater deposit ; and so for days 
the search may be continued, often disappoint- 
ment after hardship is the only reward for 
one's efforts ; perhaps the supplies are not suf- 
ficient and the honest prospector must go back 
to his principals or partners, and say that he 
has found only signs, and small deposits of 
mineral, and urge that more money be given 
for another grub stake that he may go back 
again and continue the search. Sometimes the 
money is given, but more frequently it is re- 
fused, and the prospector, setting himself to 
work, probably in the mines and holding his 



AND HOW TO JUDGE THEM 171 

own counsel, will save and save till a stake has 
been accumulated, and he is ready to go search- 
ing again after his treasure. Some night he is 
off secretly that he may not be followed, be- 
cause some prospectors are always trying to 
win what another has found; those who are 
dishonest do this, but among many respect is 
shown to those who have done the work, and 
the prospecting ground is left undisturbed be- 
cause the mountains are very broad, and there 
is room enough for all to search; and then 
every prospector has a theory, and fancies that 
he knows some place where fabulous wealth 
is just about to be discovered, so each one 
seeks his favorite haunts, and the chances are 
that our prospector having held his own coun- 
sel will find the place where he was working 
just as he left it. Now the search begins again, 
old locations are visited, the trend of the min- 
eral formation is observed and following these 
signs one day the prospector does come across 
the outcroppings of a really important ore de- 
posit, it is to be expected, for where there are 
numerous small deposits a greater develop- 
ment is probable. Triumph is in the man's 
heart, success has crowned an honest effort, 
there is mineral in broad exposure; and work- 
ing now with haste and eager breathings he 
traces out the mine which he has found; his 



172 MINING INVESTMENTS 

mine, it seems almost as if it were his child; 
henceforth let anyone but whisper aught 
against it and his enmity must be counted as 
assured. Yes, the mine is a great one, the lo- 
cations are carefuly made, one, or even ten or 
more, as the extent of the discovery may war- 
rant; then taking samples the prospector goes 
triumphant to the nearest city. Anxious mo- 
ments now await while tests and assays are 
being made. Yes, the results are favorable, 
the mine is rich, the prospector's fortune has 
been made. Then the news is published, the 
prospector goes back to work his claims, prob- 
ably giving a just share to his former partners 
w 7 ith whose money he had half made his rich 
discovery. While so engaged others come, 
and soon bands of men are searching all the 
hills and mountains, perhaps one or two other 
great mines are discovered; but to a certainty 
all the little mineral spots and minor veins, 
which, to the first prospector had indicated the 
great deposit, are now taken up ; and presently 
a score or more of mining companies are offer- 
ing stock in prospects, just near the great dis- 
covery. Always the claim is made that con- 
ditions are to improve with depth, but the 
knowing one get shares in the main ledges, or 
stay out of it, if the shares in the main ledges 
are too high in price. 



XVIII 

The Prospector and His Agent. Honest 
and Dishonest Work Compared 

Will he secure the benefits of his discovery? 
So many have located mines and then lost them 
through dishonest agents, that naturally the 
prospector is suspicious. Here is a point which 
one can consider when a mining venture is 
under advisement: If the agent in charge of 
the negotiations is a man who has the confi- 
dence of the miners and prospectors he is 
pretty certainly a man who can be trusted by 
anybody. 

This chapter is to tell not so much of the 
relations of investors and agents, as to show 
how all the losses in mining do not fall on those 
who supply the money for operations. 

The mine agent or broker is always 
scheming, honestly or dishonestly; he has a 
purpose to accomplish, he seeks to obtain con- 
trol of a mine which has been discovered, and 
so manipulates the arrangements for incorpo- 
ration that he may benefit in a share of the 

173 



174 MINING INVESTMENTS 

property, and at the same time put it in a po- 
sition from which capital can be obtained for 
its operation. When this is honestly done any 
profit which the agent or promoter may obtain 
is well deserved; but where the work is not 
fairly rendered, where the control of the prop- 
erty is secured by questionable representation, 
and promises which the promoter cannot ful- 
fill, then the shares obtained are illy gotten; 
but unfortunately the laws are such that it is 
as difficult to punish such transgressions as it 
is to obtain judgment against one who has sold 
and misrepresented shares. In some instances 
a clear case is shown, but most frequently the 
undertakings turn out to be only that due 
effort should be made, and a positive engage- 
ment is not found ; and by due effort anything 
may be intended; so the case is hard to reach, 
and the prospector who has found a mine must 
be careful. Unfortunately, watchfulness, in- 
telligently exercised, is as rare among those 
who have found mines, as caution and serious 
effort at investigation is rare among those who 
invest in mining shares, and the promoters are 
the principal causes of all the difficulties. 

Our prospector having secured his papers, 
and having finished enough work on his claims 
to hold them for a year, must look for larger 
capital to put them on a strong working basis. 



AND HOW TO JUDGE THEM 175 

He does not have to look far to obtain agents ; 
the fame of his discovery has gone abroad and 
he is fortunate in being able to pick and 
choose? Having found a satisfactory man, a 
clear contract is drawn, the rights of the pros- 
pector in the share of the mine which he will 
keep for himself, the share he will allow for 
the capital, and the percentage he is willing 
to pay the agent, are all clearly designated ; the 
titles are then deposited to protect the transac- 
tion, and after that a company is formed, and 
generally good results are obtained, not only 
for the prospector, but for those who purchase 
shares ; and under careful just management an- 
other is added to the long list of brilliant and 
successful mining enterprises. 

It is very pleasant to find such instances, but 
unfortunately all are not so, and many a pro- 
moter is responsible for ruin and loss where 
better results might have been obtained. Not 
all prospectors are so successful as to find a 
mine which is great enough to command at- 
tention. There are many properties, and min- 
eral deposits; and oftentimes the owners must 
make all sacrifices to obtain the necessary 
funds, but there is such doubt attached to a 
prospector's story that often years pass before 
a man who has discovered a mine can obtain a 
hearing, and naturally the mine agent can 



176 MINING INVESTMENTS 

make his own terms ; if only he will render the 
services, he can have the mine on deferred 
payments, that is, stake the mine and control 
it for purposes of organization and promotion, 
paying himself after the work is done. 

Usually a man who has discovered a mine 
can in a little while find someone to undertake 
its promotion, and then, if the agent is not 
strictly honest, the contracts and agreements 
are so drawn that the owner is completely 
under the control of his agent. Usually the 
first step is to make an agreement stating on 
what terms the agent may control the prop- 
erty. Frequently the time limit is made as 
extended as the mine owner will allow, and 
the promoter goes to work or perhaps only 
appears to go to work to obtain subscriptions 
for the proposition. At any rate the expected 
contributions to the working fund are not ob- 
tained, but men are introduced who urge that 
if the mine were put in a company, then stock 
could be sold and money obtained, so after a 
time a company is formed and the property is 
transferred to it for shares, some of the shares 
are voted to the treasury, and a goodly pro- 
portion to the promoters, who now take more 
interest in the property, naturally because they 
own a large share in it. Some money is ob- 
tained through the sale of shares, most of it 



AND HOW TO JUDGE THEM 177 

going to the promoters who sell their own 
stock — it is theirs, what law can prevent them 
from selling it? Some money is used on. the 
property, enough to perhaps demonstrate to 
the promoters that it is a good thing, and then 
the whole proposition drags, money cannot be 
raised; the prospector must live, and presently 
he wants to sell some shares. Impossible, 
there is no market, the promoters have been 
unable to even sell the treasury stock. To re- 
mind them of their promises is of little use, 
what they said was what they expected to 
achieve, but for one reason or another con- 
ditions have not been favorable; after a time 
when the situation improves they will be able 
to carry out the arrangements; but the pros- 
pector wants money, so he finally sells a large 
block of his shares for a trifling price, and 
when he wants more money sells again; and 
presently all his stock is gone, and the mine he 
discovered is no longer his. Then he goes 
back to the mines cursing the promoters, 
damning corporations and swearing that stock- 
holders are a set cf sharks and thieves; but it 
is the promoters who have bought his shares 
for almost nothing, and now that they own all 
the property, or rather have it all under their 
control, with the majority owned by them and 
a good balance of stock in the treasury, they go 



178 MINING INVESTMENTS 

to work and develop the property, obtaining 
money by selling the shares; and most likely 
let the property fail two or three times, and 
by foreclosure or bankruptcy proceedings buy 
it in, and sell the shares of reorganized com- 
panies, repeating the operation, till finally the 
mine is on a working basis ; and they have ob- 
tained the property from the discoverer, at 
forced sale, and by manipulation, and who have 
obtained money from several sets of stock- 
holders to bring it to development, reap the 
benefit of their conspiracies, and own a fully 
developed mine. 

The question may be asked why does the 
prospector have to do as the promoters or 
agents desire? Why does he not sell his shares 
directly to the investors? He cannot do so — 
investors will rarely listen to the man who 
owns the property and buy shares of him ; and 
then he does not know how to organize, and 
naturally he seeks the promoter; and if pro- 
moters who may not be honest have obtained 
a hold on his property he must sell through 
them or not at all, for who would buy a stock 
if those who have organized the company ex- 
press doubts and rather talk against the propo- 
sition, and criticise the discoverer. Of course, 
people will not buy, and probably it is well 
they should not; for a set of promoters who 



AND HOW TO JUDGE THEM 179 

scheme to freeze out the discoverer, will later, 
if the property turns out well, scheme to freeze 
out the investors, and losses will result to both 
the discoverer and those who may invest. 



XIX 

The Prospector, the Promoter, the Bank- 
er and the Investor. Correct and 
Dishonest Work Compared 

Three against one is not a fair combination, 
yet the prospector, the promoter and the 
banker are frequently an adverse combination 
against the investor in mining stocks; and 
when the combination is formed for dishonest 
purposes the investor has a poorer chance be- 
cause usually he trusts the banker. Probably 
the bankers are more to blame for losses in 
mining than are any other people. They are 
to blame, it is claimed by some people, for two 
reasons; it occasionally happens that they 
enter into unlawful combinations with the pro- 
moters to sell questionable shares to unsus- 
pecting investors; and the other reason why 
the bankers frequently cause loss is that they 
will sneeringly dismiss the subject when a 
client asks advice in reference to a mining ven- 
ture. The banker fails to obtain for himself 
participation in one of the greatest, if not the 

181 



182 MINING INVESTMENTS 

greatest of our industries, and leaves his client 
without means of information, and an easy 
prey for the unscrupulous promoter. In regard 
to railway stocks, industrial stocks, municipal 
and corporate bonds the banker is well in- 
formed and seeks constantly to obtain infor- 
mation. In regard to mining he is densely 
ignorant, nor tries to better his information. 
The banker occupying as he does a public 
position neglects his duty when he makes no 
effort to serve intelligently such of the clients 
of his house who may become interested in 
mining propositions. He does them a double 
wrong by refusing to recognize in mining a 
great corporate industry because he retards 
their participation in this great industry, and 
by intelligent advice he could make advantage- 
ous investments for the clients of his house, 
where, by leaving to their own resources those 
who otherwise would seek his counsels, the 
way is left open for men who work by methods 
which at best are questionable. 

An inquiry as to how bankers frequently 
take part with promoters will show many inci- 
dents of interest, and in some respects the 
bankers in the great financial centers are as 
gullible as the most innocent small tradesmen 
of a provincial town. 

The promoter knows that to succeed he 



AND HOW TO JUDGE THEM 183 

must approach each victim on his most acces- 
sible side, and usually in dealing with a bank- 
ing financial house he begins by opening an ac- 
count for speculation in listed stocks. It may 
have been decided between the prospectors and 
promoters, that the property they represent 
should be offered in the great financial mar- 
kets; to do this money is required, and fre- 
quently they have money, and after laying 
their plans it will happen some morning that 
a well appearing gentlemanly man calls at a 
New York banking house to make inquiries 
in regard to the stock market. The bankers 
are there for that purpose, and at once become 
interested in the pleasant stranger, and cor- 
dially invite him to call again. Of course, he 
calls again, this time with some money, and 
an account is opened. It proves a good ac- 
count because the new client is there to seek 
favor and keeps his money active, taking small 
profits or losses, making several transactions 
a day and becomes a regular habitue of the 
place. Naturally the talk drifts to mining, and 
presently the bankers become interested in his 
stories ; samples are shown, and the next thing 
a mine is offered through their house backed 
by one of their best customers, a shrewd suc- 
cessful man from the west. Then the game 
begins; the prospector and others who have 



184 MINING INVESTMENTS 

come on from the mining country, and are 
introduced; more money is put to the stock 
trading account, and the bankers have three 
or four active customers, who are in and out 
of the market, usually in quick turns, making 
about as much as they lose, or, if losing, the 
amounts are small, and the accounts can be 
kept active for a long time. 

With such reputable backing as the bankers 
have given, with such shrewd, successful men 
operating the proposition, with such wonderful 
stories as are now circulated, the stock of the 
mining company this group of men represent 
begins to attract attention. The bankers buy 
some shares, many of their clients buy, people 
in the open market buy, the stock goes up, the 
greatest bonanza ever known has come out of 
the west, there is a scramble for shares, an ac- 
tive market for a time; the papers contain re- 
ports and interviews, all paid for, of course. 
What reporter ever wrote who would not make 
comments for a reasonable fee? Then comes a 
time when the miners must go back to see to 
the operations of their property. For a while 
the market keeps up, then begins to sag, the 
bankers send for information, but it is slow 
in coming ; inquiries are sent to them from all 
about, and the stock goes lower ; then comes a 
day when the bankers must reluctantly admit 



AND HOW TO JUDGE THEM 185 

that where they had taken the word of their 
pleasant, active customers, they find on in- 
vestigation that the grossest exaggerations 
have been practiced on them, and they must 
confess that they have been taken in. Yet 
from time to time it is whispered about that 
not all bankers are taken in, some retain a 
share of the plunder, and make loud invectives 
against mining in general and the proposition 
in particular which lately they were backing; 
and when the discontent and criticism has sub- 
sided, they presently, that is some of them, be- 
come interested in another mine. 

Not always are the bankers in friendly rela- 
tion for profit with the mining promoters of 
questionable propositions; frequently they are 
genuinely stuck, and some are known to have 
refunded all the money which had been placed 
in a worthless enterprise through their mis- 
guided influence. It has been said that the 
wealthy brokerage houses doing a banking 
and stock business are the most easily taken 
in and caught by an exaggerated mining propo- 
sition, if only one or two active accounts are 
first introduced to make easy the presentation 
of the scheme. What is so respectable as an 
active account? Of course the mines coming 
from such a source are good; and the banker 
densely ignorant of mining, though it is one 



186 MINING INVESTMENTS 

of our greatest industries, makes of himself 
an easy mark. There are few honest mines 
offered in the great, financial centers, the 
bankers are too sneeringly supercilious. Min- 
ing? They could not consider it. It is related 
that a man with an honest face and a pocket 
full of specimens stood once on the steps of a 
banking house and said under his breath: 
"Well, I'll be damned." He had a good propo- 
sition, one worthy of investigation, and had 
come east to find someone who would help 
him float it. He did not have money to open a 
fancy account, he was looking for someone who 
would take an mterest in his proposition, and 
had been sneeringly turned down. Such had 
been his experience in a good many places. 
Finally he got in with some outside promoters 
and they floated the proposition. The papers, 
that is some of them, published attacks, criti- 
cising those who had taken the matter up, who, 
according to what the papers said, were fit 
subjects for criticism. Still the proposition 
grew, and found favor; and presently a great 
mining boom had developed. Nevada was 
brought to life again, treasure had been found ; 
a real series of great mines had been dis- 
covered, a business running into hundreds of 
millions was being transacted; but among the 
greater bankers and brokers not the percent- 



AND HOW TO JUDGE THEM 187 

age represented by the fraction of a mill was 
transacted, the whole great business went to 
others. The bankers had not lived up to their 
public duty, they had no means and sought no 
information by which they could intelligently 
advise in regard to mining propositions; and 
there being no established places in which one 
could be advised any proposition could be 
floated on the tide of excitement, resulting in 
the sale of questionable shares to the extent of 
millions of dollars; all, or the greater part of 
which at least, could probably have been saved 
had the bankers done the duty which their 
public positions would seem to require of them, 
and had taken the same care in regard to min- 
ing stocks which they take in regard to railway 
and other propositions. 

If honest work were done the different trans- 
actions would be something like the follow- 
ing. A miner or prospector visiting a promi- 
nent banking house with a proposition would 
be heard and his claims given to a suitable per- 
son, perhaps an employe in charge of the min- 
ing interests, who would investigate and find- 
ing the proposition questionable would so re- 
port to the house, but finding it desirable the 
business would probably be taken up, a min- 
ing engineer and an economic geologist would 
be called; and if they found it favorable, a 



188 MINING INVESTMENTS 

banking house of standing would presently be 
offering a desirable mining stock, and a repu- 
table promoter retained by them would be 
pushing about and developing a market; then 
it would be that the prospector, the promoter 
and the banker would have been brought to- 
gether on a proper basis to serve the investor. 
If such ever comes to be an established cus- 
tom and investors will seek their bankers as 
the proper medium through which to obtain 
mining stocks, and if the bankers, not unmind- 
ful of their public duty have at their command 
real advice from competent engineers, geolo- 
gists and local representatives near the mines, 
a sort of Utopian condition will develop in min- 
ing; and very few questionable propositions 
will be able to get through the offices of 
watchful banking houses, and reach the public 
to the disadvantage of those who may invest. 



XX 

The Trials of a Mining Engineer and 

the Final Success or Failure of 

an Enterprise 

It is the man behind the gun who wins the 
battle, and it is the man who overcomes the 
difficulties of operation who finally makes the 
mine a success. 

A great mine owner once said : "It is easier 
to get a mine than a man. Give me a man and 
I will get the mine." There is much of truth 
in this saying, and many a good mine has been 
spoiled by poor management. 

There are various kinds and varieties of min- 
ing engineers ; there is the genuine article with 
suitable credentials, there is the man who has 
taken the profession up and sort of just worked 
into it, and there is the mining engineer who 
does his mining in barrooms and hotel corri- 
dors. These latter are the men who mostly 
get up schemes, and do as they would not be 
done by, which in modern slang can be ex- 
pressed "Do the investors." Loud talking, 

189 



190 MINING INVESTMENTS 

bragging, swaggering— these are the charac- 
teristics of the man who does his mining in 
barrooms and hotel corridors; when such are 
met avoid them. 

Those mining engineers who have taken up 
the business and just sort of worked into it are 
generally known by their contempt for techni- 
cal training, and their boasting approbation 
for practical mining. When dealing with such 
men be a little careful, they frequently gradu- 
ate into the class who mine in barrooms; but 
some of them are eminently practical, well in- 
formed men, whose advice and guidance are 
often of the highest merit and value. In min- 
ing there is no school which can turn out such 
valuable men as the "School of Hard Experi- 
ence." Only very few really graduate, because 
to become a well informed mining engineer, 
possessed of both knowledge and experience, 
one must have worked under varying con- 
ditions, and must have had the energy and 
strength to have spent long hours at study 
after an arduous day's work had been done. 
There are such mining engineers ; usually they 
are not boastful, but their services are invalu- 
able. The trouble with most mining engineers 
who have not had a regular course of technical 
training is that they have not done the study- 
ing to obtain the information which an engi- 



AND HOW TO JUDGE THEM 191 

neer should have, and as a consequence their 
work is superficial. A man who faithfully 
studies while working in the mines can, after 
about twenty years of effort, observation and 
study, consider himself a graduate of the 
"School of Hard Experience," and will have 
obtained all which the college boy will attain 
in his four years course, and a great deal more 
besides which the college graduate will prob- 
ably never attain; and often the graduate in 
the school of experience may justly consider 
his attainments far above those of the ordinary 
technically trained mining engineer, but in the 
"School of Hard Experience" there are very 
few real graduates. 

Then we have the regular graduated mining 
engineers, all of them exceptionally well in- 
formed men, most of them capable of in- 
telligently applying what they know, and some 
few of them combining the technical training 
with real and varied experience; such men 
are the real leaders of the profession, and if 
any investor is so fortunate as to know such a 
man, let him be wise, and keep putting money 
into the mining propositions his friend may ad- 
vise, and the chances are he will become rich. 
Besides these there are the practical miners, 
men who have devoted lives to work in the 
mines, many of them with good hard sense, 



192 MINING INVESTMENTS 

but informed in too limited a scale, to be safe 
guides in relation to mining investments ; often 
they make the most excellent mining superin- 
tendants and managers, but just as often they 
undertake works of development, and follow 
flights of ambitious fancy into realms which 
they do not understand ; then they make heavy 
losses, and bring disaster for the enterprise 
which has been intrusted to them. 

When a mine is put in operation some one 
or the other of these different classes of mining 
engineers is probably in charge, excepting only 
the engineers who do their mining in bar- 
rooms and hotel corridors. Such men usually 
never seen a mine, or if they do, it is a super- 
ficial examination only, a visit, an outing, 
drinking and big talk— a grand time; but 
very little practical consideration of the mine. 

Let us suppose that a mine is to be put in 
operation, and that the engineer with a party 
of men has arrived, and is preparing to do the 
work. A rough camp has been built by people 
who had discovered the property ; there are the 
outcroppings or exposures of the mineral, with 
some pits dug into them, now partially filled 
with rubbish and dirt; the surroundings are 
rough and probably not very attractive. The 
door of the camp is pushed open and a damp 
chill, and mouldy odors blow in one's face, a 



AND HOW TO JUDGE THEM 193 

rat or two may go scuttling away, then in a 
moment or so more the cabin windows are 
opened to let in some light, after which all is 
bustle and disorder; equipment for the first 
operations is arriving, and quite a stirring 
about takes place in the camp, where, perhaps 
for some months everything has been aban- 
doned. The engineer then goes to look at the 
mine, naturally the mine is first in his thoughts, 
and goes to have a look at it while the men 
are unloading the outfit. When he has had 
more experience he won't do that, the mine 
will stay where it is, and he had better keep 
check on his supplies and see that instruments 
are properly handled. But there is the fore- 
man. Yes, but as a matter of fact there is no 
such thing as a foreman; when a man is 
capable of being a foreman he will soon pro- 
gress to be a manager. The engineer is well 
pleased with the appearances of the property, 
certainly it looks like a good thing, and he 
spends probably an hour or two in a prelimin- 
ary examination. Returning to the camp he 
finds nothing arranged as it should be, the men 
have stupidly piled goods, boxes and instru- 
ment cases indiscriminately, and probably a 
day, perhaps two or more, will be required to 
put the supplies in order ; then most unreason- 
ably the mule drivers pack their animals off, 



194 MINING INVESTMENTS 

and will not wait an hour, their contract was 
to deliver the freight at the camp; there it is, 
give them their money, that is their demand; 
and counting it, they are off down the trail. 

Arranging the supplies will take some time, 
but the engineer can start the survey of the 
property, and asks for the case containing his 
compass and instruments; a man with 
apologetic consternation in his face brings it 
with word that some of the things got jolted 
a little, but he guesses not much hurt. Not 
much hurt! Only a lens broken, the sights 
on the compass twisted and the balance thrown 
out of adjustment. Well, surveying is out of 
the question for the present, some photographs 
can be taken. More apologies from the men, 
it rained one day on the trail, the engineer re- 
members that, and one of the packs got wet, 
just a little wet, it isn't much, and the camera 
outfit happened to be in that pack. The 
men bring it, but no use talking of pictures, the 
outfit is done for. Now it is a question of the 
man behind the guns, how much of a hero com- 
bined with a- genius he may be. Technical in- 
formation will not help him much, a disorgan- 
ized, battered outfit is placed at his feet, and 
there is a mine at hand which he is to examine, 
survey, draw up the plans for equipment and 
open to the best advantage. He may sit down 



AND HOW TO JUDGE THEM 195 

and write to his principals that owing to diffi- 
culties on the trail, carelessness on the part 
of the freighters and pack drivers, serious dam- 
age has been done to the supplies, and work 
must be delayed till fresh material can be sent 
in. He will have to write of the loss, and I 
never saw an expedition start out into the field 
yet which did not meet with some accidents; 
in my own experience I have learned to 
pack my instruments on my own back, or 
make up my mind that I must do without 
them, and in that case it is just as cheap to 
leave them at home. 

Our engineer may sit down and wait for new 
supplies, or he may get to work as best he 
can. There is the survey to be made; a great 
pity it cannot be done better, but the property 
can be chained off, and a rough survey made 
which, after all, does fairly well answer the 
purpose, because there is plenty of room, and if 
it does not close by several feet the error can 
be corrected later. The outcroppings can be 
measured and estimated, levels can be taken 
with rods, and by hard work and constant ef- 
fort the enterprise can be driven forward, and 
presently the surface work is done; a plumb 
line and rods serving in place of the broken 
lense ; a hand compass, or perhaps only a north 
and south line made from the stars, taking the 



196 MINING INVESTMENTS 

place of the surveyor's compass; with this 
rough equipment and careful attention to de- 
tails, the engineer has a fairly creditable sur- 
vey made with tools in place of instrumens, 
and before new supplies could reach him he 
is ready to begin work opening the mine. This 
work begun it seems as though some accident 
were always happening. In comes a man with 
a bleeding hand, the engineer must turn physi- 
cian, and fortunate, indeed, for him, if he has 
had time to take a course of medicine, if only 
to attend a few lectures and to have learned to 
bandage cuts and set bones, because it is as- 
tonishing the number of accidents which will 
happen among a company of men at work 
opening a mine. 

Day after day the work is pushed on, and 
it seems as if the mining engineer must be in a 
dozen places at once; tools getting broken, 
men getting hurt, men turning sick, the cook 
threatening to leave, the workmen shirking, 
and a hundred other things. Nature is jeal- 
ous of her treasures, and the number of coinci- 
dences, accidents, and impediments which can 
beset a new mining enterprise seems beyond 
calculation. If the engineer in charge is a 
combination of hero and genius, the work will 
be pushed steadily on to triumphal success, 
or if the people putting up the money realize 



AND HOW TO JUDGE THEM 197 

what must be contended with and overcome, 
and are willing to put up money, and put up 
money, and then put up more money, the work 
will be done after a time; but too frequently 
those who sit at home ask of their engineer 
more than human heroism, energy and intelli- 
gence can give; and with ail the trials, priva- 
tions and constantly recurring difficulties to be 
overcome, unreasonable, criticising letters from 
home are often the cause of a sort of disorgani- 
zation in the effort, a demoralizing influence 
which brings disaster. But where the right 
kind of man is to the fore the work goes on 
from day to day, surveys are made, mineral 
bodies located, opened and proved up, the 
machinery does get in place, and is put 
through its adjustment, till finally a successful 
result is obtained, the mine shows a profit, ore 
in abundance is in sight, and the triumph is 
complete, though sometimes it takes years of 
effort to attain it. 



XXI 

The Gist of the Whole Matter 

Does one want to become rich — one can be- 
come rich through intelligent investments in 
mining stocks, but not without working. In- 
vestigate — that is the gist of the whole matter. 
One may make some money by a lucky stroke 
in a mining risk, but if one is lucky one does 
not need to be rich, and then very few people 
are lucky, most have to work for what they 
obtain; and to obtain good results in min- 
ing propositions the work required is that one 
should investigate, and do it for one's self, not 
depending on others. We have read of a great 
many things and conditions relating to mining, 
from such reading one should know along 
what lines to investigate; and if one does the 
work, makes real personal investigations, and 
puts together the independent testimony re- 
ceived from different sources, and then uses 
good judgment; remembering that nothing is 
sure in mining, that it is a speculation, not an 
investment ; that even with the best care losses 
must be expected, and that the money is placed 

199 



200 MINING INVESTMENTS 

for a great winning or a total loss, because 
there is no middle ground, if the mine don't 
pay it is a total loss, but if it does pay it is a 
tremendous profit. One can afford to lose 
something where such great profits are had, 
but if one just buys mining stocks on the 
recommendation of others, and takes the 
chances, the chances are that one will lose with 
disheartening regularity ; but if one will do the 
work, and really investigate, one will make 
money a great many times, and this is the gist 
of the whole matter. A great many minor 
points must be examined, but principally one 
must know three things: first, that the parties 
soliciting the use of his money have got a 
good thing; second, that they have the ability 
to obtain good results out of a good thing and 
third, getting such results that they are honest 
enough to give him his just proportion of what 
they obtain. 



APPENDIX. 



Tables and estimates for calculating the 
values of mining stocks. 

Republished by the kind permission of the 
Editors of the Mining World, from a series of 
articles published in that journal during 1905 
and subsequently published by them in pam- 
phlet form in 1906. 



201 



MINING STOCKS 
How to Calculate Their Values 

No investments present such vicissitudes of for- 
tune as mining ventures. There is scarcely a man 
in our country who has not at one time or another 
purchased mining shares in the hope that he might 
secure an investment comparable to those glittering 
examples of success so industriously advertised by 
the promoter. Yet mining is a good business, and 
it is desirable that investors should purchase min- 
ing stocks. 

It is difficult for those not informed in regard to 
the technicalities of mining to exercise good judg- 
ment as to what they should and what they should 
not purchase, and, unfortunately, very few are suf- 
ficiently informed to know even what points should 
be examined, and what questions asked, in order to 
form an opinion on mining investments. 

The following statements,, calculations and tables 
represent an effort to bring together material which 
may be a guide to the proper understanding of the 
risks and opportunities in mining ventures. 

Certain facts, given below, should be borne in 
mind when considering this class of investment. 

1. There is no middle ground in a mining invest- 
ment; it is either a total loss or a profit. In other 
enterprises a reduced rate of interest or even losses 
may be recovered later by better business; but if 
mine does not pay it is a total loss. 

203 



204 MINING INVESTMENTS 

2. There is no mine so great it cannot be ex- 
hausted, consequently, all mines must be worked 
out in time, and each ton of mineral taken out brings 
the property one ton nearer to the point where all 
the mineral will be exhausted, leaving an empty shell 
of stopes and shafts from which no further returns 
can be expected. 

3. The all important question is not the dividends 
a mine may be paying, but the quantity of mineral 
remaining underground from which dividends can 
be earned. 

4. Mining, because of the possibility of rapid 
changes from nothing to discoveries resulting in 
enormous wealth, becomes an absorbing passion. 
Hence the miner frequently loses his judgment in 
his hopes J ike the gambler expectant of good for- 
tune. 

5. When enthusiastic statements are made about 
a property to encourage investments one should not 
be skeptical of the miner's honesty, but should make 
careful inquiry and consult the tables herewith pre- 
sented for estimating the average risk, then, if the 
results seem favorable, the investment may be con- 
sidered. 

The following inquiries should be made before 
purchasing any mining stocks, no matter how allur- 
ing the prospectus. 

1. Does the company actually own its property? 
This can be learned by examining the record of the 
company's titles. 

2. Are there any debts? This can generally be 
learned from the reports made by the company's 
officers, because if they make false statements they 
become criminally liable. 



AND HOW TO JUDGE THEM 205 

3. Has the mine been examined by a competent 
mining engineer, or economic geologist? Inquiries 
should be made as to where the person writing the 
report pursued his studies, what practical experience 
he has had and what recognition has been given his 
work by technical institutions. 

4. Do the people who are interested in the com- 
pany understand mining as a business? This can 
be learned by making inquiries among people asso- 
ciated with reputable mining companies, and from 
the references presented by the parties interested. 

5. Are the people managing the company worthy 
of confidence? For this information consult their 
references, and the mercantile agencies. 

If, after making the inquiries outlined above, it 
is found that the company does not actually own 
but proposes to acquire a property it may have 
under contract (option); or that debts are accumu- 
lating, or that the report recommending the prop- 
erty is made by a person of inferior attainments; 
or that the people interested in raising the money 
are simply brokers or promoters and not men of 
practical experience in mining proper; or if the man- 
agement of the company is not worthy of confi- 
dence, then the proposed investment should be most 
cautiously considered and accepted only on evidence 
of very strong counterbalancing advantages. 

If, however, the inquiries made are answered sat- 
isfactorily, the investment may be considered with 
favor, but it will always be subject to the chances 
of fortune common to all mining operations. What 
the chances of fortune are may be approximately 
estimated by using the tables herewith. 

Mining stocks are valued only by the dividends 
they will pay. These payments can be maintained 



206 MINING INVESTMENTS 

only so long as valuable mineral is mined, after 
which the stock of the company is worthless. There- 
fore, the cash value of a mining stock should be the 
present worth of prospective dividends. The chance 
of not receiving the dividends is always threatening, 
but there is also in every mine some opportunity 
for rich discoveries which will result in a higher 
rate of dividend; these two elements of risk in some 
measure balance each other. While the present 
worth of prospective dividends is a fair basis on 
which to calculate the value of a mining investment 
this alone is not sufficient; one must be a keen judge 
of future prospects, and be well enough informed 
to know how much valuable mineral may remain 
in the mine, because from this "reserve" only can 
dividends be paid. 

The life of a mine, that is the period during which 
it can pay dividends, is variable. There are a few 
famous mines which are apparently inexhaustibly 
supplied with ore, but such mines are rare. Since 
the life of most mines is limited a cautious investor 
in figuring a present worth for prospective dividends 
should make his calculations on a short dividend 
paying period, except when considering well estab- 
lished mines with substantial ore reserves. 

Following is a table of mining values, without 
interest, based on 20 per cent, dividends, the amount 
invested being $100. 

Dividends Loss if 

Year received mine fails 

First $ 20 8o% 

Second 40 60% 

Third 60 40% 

Fourth 80 20% 

Fifth 100 Nil, except interest 

Should the mine continue to pay after five years 
the values then remaining are clear profit. In this 



AND HOW TO JUDGE THEM 207 

simple table, however, interest is not taken into 
account. A comparison may be made between $100 
invested at 6 per cent., and $100 invested in mines 
at 20 per cent., crediting the 6 per cent, each year 
to the secured investment, and deducting the 6 per 
cent, each year from the mining investment. Re- 
member that 20 per cent, return on a dangerous in- 
vestment is not 20 per cent, net profit, since the 
money would produce 6 per cent, on a better secur- 
ity; the real profit is the difference, or 14 per cent. 
annually. 

The following table shows the value of mining in- 
vestments as compared with investments whose 
principal is secured. Mining investment to pay 20 
per cent., secured principal to pay 6 per cent, per 
annum. Amount invested $100 in each case: 

Sioo on Good Security Sioo in Mining Stocks 

Divi- If mine 

Year Int. 6% Year dend, 20 % fails 
Amt. 

First 8 6 S106 First $20 86% loss 

Second 12 112 Second 40 72% loss 

Third 18 118 Third 60 58% loss 

Fourth 24 124 Fourth 80 44% loss 

Fifth 30 130 Fifth 100 30% loss 

Sixth 36 136 Sixth 120 16% loss 

Seventh 42 142 Seventh 140 2% loss 

Eighth 48 148 Eighth 160 *Si2 profit 

Ninth 54 154 Ninth 180 t 26 profit 

Tenth 60 160 Tenth 200 j 40 profit 

♦Equal to ij^% per annum for the eight years, 
t Equal to 2.88% per annum for the nine years. 
t Equal to 47c per annum for the ten years. 

At the end of the tenth year it is apparent that 
a mine paying 20 per cent, in dividends per annum 
has returned the principal and 100 per cent., but it 
is not so readily understood that this 100 per cent, 
cannot be considered as net profit. The same money 
on reasonable security would have produced $60, and 
if at the end of the ten years the mine is exhausted 



208 MINING INVESTMENTS 

the returns will be $100 principal, $60.00 interest and 
$40.00 profit, the mine produced $200, and the real 
profit in ten years is $40, equivalent to 4 per cent, net 
profit per annum after deducting principal and inter- 
est. If at the end of ten years the mine is exhausted 
the profit has been only 4 per cent., but should it con- 
tinue to pay the profit is larger. From the tabu- 
lated results the conclusion is reached that, after 
allowing for principal and interest, if the mine pays 
20 per cent, for eight years, there is a slight profit; 
if for ten years, it is a fair profit, and if it pay 20 
per cent, more than ten years there is a very good 
profit. 

Ten years, however, may be regarded a rather 
long average for the life of most mines, but with 
a dividend of 20 per cent, the money invested is re- 
turned in five years, at the end of which period the, 
loss, if the mine fails, is simply the interest. A fair 
calculation in determining the value of a mining 
share is five years' dividends estimated at the rate 
the mine may be paying. If the mine were well es- 
tablished the time for calculating the value of its 
shares might be extended to ten years, but if the 
shares were purchased on such a valuation the in- 
vestor would require ten years' continuous dividends 
before his money could be returned without interest, 
and this is a rather slow proposition. 

In some great mines where large ere reserves, 
sufficient for many years' working, have beei* 
proved up, the shares become a business proposition, 
and their value can be safely estimated according to 
the worth of the ore in sight and the cost of mining 
and milling it; but for ordinary mines the tables 
above will be found serviceable in estimating stock 
values. 



AND HOW TO JUDGE THEM 209 

If the values of mining shares are calculated 
at compound interest the results will be much more 
favorable to the investment, but as there is always 
a risk that the mine may fail, compound interest 
valuations cannot be considered equitable, excepting 
that a deduction is made to allow for this risk, this 
deduction bringing the computation to about the 
basis of simple interest; therefore a compound in- 
terest calculation should be considered only as an 
interesting tabulation of values to be obtained if 
the mine continues paying for a long term of years. 

The table below shows the returns from mining 
shares paying 20 per cent per annum (dividends re- 
invested in the same mine at the same rate annually) 
as compared with money at 6 per cent, compound 
interest on good security. Amount invested in each 
case is $100. 

Year Interest 6% Amount 

First S6.00 $106.00 

Second 12.36 112.36 

Third 19.10 119. 10 

Fourth 26.25 126.25 

Fifth 33.83 133.83 

Sixth 41.86 141.86 

Seventh 50.37 150.37 

Eighth 39-39 159-39 

Ninth 68.95 168.95 

Tenth 79.09 179.09 

Year Dividend 20%, reinvested 

First $20.00 86% principal remaining at risk 

Second 44.00 69.36% principal remaining at risk 

Third 72.80 46.30% principal remaining at risk 

Fourth 107.36 18.89% principal remaining at risk 

Fifth 148.83 15% Gain, 3% per annum 

Sixth 198.60 56.74% Gain, 9.46%- per annum 

Seventh 258.32 10795% Gain, 15.42%- per annum 

Eighth 329.98 170.59%. Gain, 21.32% per annum 

Ninth 415.98 247.03%r Gain, 27.44% per annum 

Tenth 519.18 340.09%. Gain, 34.01% per annum 

From these tables, calculating the value of mining 
shares, one at simple, the other at compound, in- 
terest, it is evident that a mine paying 20 per cent. 



210 MINING INVESTMENTS 

annually for ten years and then failing would have 
returned at simple interest an amount equal to 4 
per cent, per annum profit above the return from a 
secured investment paying 6 per cent. A simple in- 
terest investment account is one where the income 
is used and produces nothing more for the person 
receiving it. Where the dividends are reinvested 
(which unfortunately is not frequent), the invest- 
ment account can be considered on a compound in- 
terest basis, and at the end of the tenth year will 
have shown earnings equal to 34.01 per cent, per an- 
num above the highest ordinary rate of 6 per cent, 
per annum. This calculation is theoretical, for if 
at the end of ten years, or at any previous time, the 
mine became exhausted, all the money invested 
would be lost, though the investor had received an 
amount equal to 34 per cent, more than the 6 per 
cent, rate per annum. Here the act of investment, 
not the calculation, would be at fault. 

This condition emphasizes the importance of the 
question, How far is it safe, or speculatively de- 
sirable, to invest in the shares of an old mine which 
has paid dividends for any considerable period? 

As an average proposition to invest on the basis 
of a cash price equal to five years' dividends seems 
reasonable, the probabilities of receiving one's money 
again are fair and it is also likely that at the end 
of five years the stock will still be worth something, 
perhaps nearly as much as the original investment, 
thus making mining investments attractive to those 
who understand them. As a matter of fact, how- 
ever, the mine in which an investment has been 
made must at some time become exhausted, sug- 
gesting that mining stocks should never be consid- 
ered as permanent investments. It is for this reason 



AND HOW TO JUDGE THEM 211 

that conditions relating to the future of a mining 
property should be carefully studied. 

An Inquiry in Relation to the Prospective Values 
in an Old Dividend Paying Mine. 

It is usual that stocks in old established mines 
sell above their worth because the claim for almost 
unlimited mineral deposits is more easily maintained 
in the case of a large producer than for a property 
that has yet to make its reputation; though it may 
be that the large producer is rapidly approaching 
the time when, its mineral deposits becoming ex- 
hausted, it will be of no further value. There are, as 
previously stated, famous mines with apparently an 
almost unlimited quantity of mineral to draw from, 
but these properties are few in number, while un- 
fortunately many mines once famous are now aban- 
doned, or they are struggling along in hopes of un- 
covering new mineral bodies. A mine at the height 
of its greatest prosperity may be in rapid approach 
to its point of final exhaustion. In view of these 
conditions the following points should be considered 
in estimating the value of stocks in an established 
mine. 

First — Calculate the value of the whole mine as 
represented by the price of its shares. To ascertain 
this, multiply the price of one share by the total 
number of shares. Is the mine worth that much? 

Second — In all established mines a portion of the 
value, is, or ought to be, secured by mineral in sight. 
Take the estimated value of the mineral in sight, 
less mining and milling charges, and divide it by 
the number of shares in the whole mine; this will 



212 MINING INVESTMENTS 

show what proportion of assured value there is for 
each share, and this assured value can be compared 
with the price of the shares to ascertain how much 
of that price is for assured values, and how much 
for prospective values. 

In estimating the ore in sight, and in estimating 
the assured value of a property's shares an allow- 
ance should be made for the risks in taking the min- 
eral out, and the dangers attending mining. In- 
quiry should also be made as to whether the mineral 
in sight is blocked out and measured, or whether 
it is in sight simply by estimates from surround- 
ing conditions; in the latter case a considerable re- 
duction should be made to allow for the risk of 
errors in estimating mineral in sight without actually 
measuring it. 

Third — Treat the unseen portions of the mine 
from precisely the same point of view as one would 
in considering an undeveloped property. In an es- 
tablished mine great returns are always expected 
from its undeveloped ground because of its past 
record, and for this there is frequently good reason, 
but the undeveloped ground has not been seen, all 
unseen ground is a risk, and the future of dividend 
paying mines in relation to their undeveloped 
ground is a risk, on the same basis that any unseen 
ground or prospect is a risk. In a dividend paying 
mine, however, one has more data to estimate what 
the risk really is. In estimating the chances for a 
future profit beyond the value of the mineral in 
sight treat all the unseen ground as a prospect and 
be guided accordingly. 

Misapprehension is frequently by reason of the 
high par value that is often placed on mining shares. 
In the other extreme the true position of a share- 



AND HOW TO JUDGE THEM 213 

holder is frequently obscured because of the issue 
of a great number of shares at a low par value. 

Under the laws of many states mining stock can 
be issue in excessive amounts full paid in consider- 
ation of a mine transferred to a company in ex- 
change for its stock. The way is open for exces- 
sive capitalization, and this is frequent. In consid- 
ering the offer of a $1 share for five cents, or a $10 
share for 50 cents, or a $50 share for $2.50, the par 
value should be entirely disregarded. The par value 
of the shares is not the point an investor should 
consider; the real question is, How many shares are 
there? If there are 100,000 shares selling at 50 cents 
each, the whole mine is selling on the basis of $50,- 
000, and the owner of one share holds 1-100,000 of 
that property. If in the same mine there are 1,000,- 
000 shares selling at 5 cents each, the property is 
marketed on the basis of $50,000; but the holder of 
one share has only 1-1,000,000 of the whole property; 
and it matters not whether a share has a par value 
of $1 or $1,000, the owner will be entitled to his 
pro rata of the value of the ore taken out of the 
mine after deducting expenses, and nothing more. 

Table for Determining Approximately the Propor- 
tionate Risk in a Mining Investment. 

Table of assured values for mineral in sight, and 
the proportionate risk for unseen ground: 

The mineral in "sight rep- For the unseen ground. 

resents of the amount The risk is for the total 

invested. amount invested. 

ioo% o% 

95 5 

90 10 

85 15 

80 20 

75 25 



214 MINING INVESTMENTS 



The mineral in 


sight rep- 


For the 


unseen ground. 


resents of tee amount 


The risk is for the total 


invested. 




amount invested. 


70 






30 


2 5 






35 


60 






40 


55 






45 


5o 






5o 


45 






e 


40 






35 






65 


30 






70 


25 






75 


20 






80 


15 






85 


10 






90 


5 






95 









100 



To ascertain the approximate chance of obtain- 
ing a profit for the risk taken use the following 
table as directed. 

The table is arranged in ten columns, each col- 
umn representing one of the conditions because of 
which the vicissitudes of mining investments usually 
arise. Through the columns ten spaces are 
ruled, and in each space a grade of condition is 
noted from the very best conditions that could be 
found placed at the top of the column and rated as 
ten; that is, ten chances in ten, of a certainty, of a 
profitable investment; to the poorest conditions 
from which any possible returns could be had, placed 
in the next to the last line of spaces, and rated as 1 
and representing only one chance in ten of a profit- 
able investment. The spaces are rated as 10 down 
to 1 and a line of spaces rated as is added to the 
table to represent the conditions under which it is 
impossible that profits could be made from a mining 
investment. 

The cost of mining and delivering the mineral is 
a risk, and in the maintenance of the engineering 
on an efficient basis there is a slight risk; these can 



AND HOW TO JUDGE THEM 215 

generally be calculated and are therefore not tabu- 
lated. 

There is some risk because of unskilled or dis- 
honest management, but American laws provide the 
means by which an investor can protect himself in 
such matters; and as a general proposition this risk 
can be allowed for by deducting one-half to one 
chance in ten from the results found by using the 
table. 

Before proceeding to an examination of the table 
it may be well to consider briefly what an element 
of chance really represents. 

Among the tabulated classifications even chances 
are represented by five. A familiar example of even 
chances is matching pennies, the chances are exactly 
equal; and it is a remarkable fact that if some 
thousands of pennies are matched it will be found 
that they are almost equally divided. An investor 
putting money in a mine where the chances are 
equal has the same opportunity to make a profit as 
if he were matching pennies. If the chances are as 
four in ten, or one less than even, he takes the 
same risk as he would when matching pennies under 
an obligation to give away one out of every five he 
secured; if the chances were as three in ten it is as 
if two out of every five secured were given away, 
and so on through all the table. Where the rate is 
better than even chances the relation can be ex- 
plained by supposing additions to the winnings in 
the same proportion as stated for reductions from 
the winnings where the risks are rated below even 
chances. 

No man can be infallible in judging and estimating 
unseen ground, and mines considered absolutely 
worthless have returned remarkable profits, while 



216 MINING INVESTMENTS 

mines reported on as the best by competent authori- 
ties have later proved disastrous failures; but such 
instances are extremely rare, and should not be con- 
sidered by a careful investor. 

In writing of mining risks and chances as com- 
pared with matching pennies a more accurate basis 
might be the comparison as above stated with the 
chance added that a great prize might be had with 
one or more of the pennies secured; such a chance 
certainly exists in mining, and is the reason why 
almost every bit of mineral found, even though the 
surroundings are unfavorable, is prospected and gen- 
erally opened to a considerable extent under a dead 
loss because of hopes that it may lead to a valuable 
deposit. 

Explanations For Using the Table. 

First— Ascertain the assured value from a cal- 
culation or estimate of the value of the mineral 
in sight; deduct from this a reasonable sum for 
the risk and expense of mining, milling and mainte- 
nance as the circumstances may require. The re- 
sult will be an estimate of the assured values which 
may be credited to the mine, and which divided by 
the number of shares will give the assured value 
per share. If the assured values indicate a profit 
on the amount invested it is a business proposition 
to which the investor may add the chances for a 
further profit as may be indicated by an estimate of 
the value of the unseen ground as shown in the 
table. If. however, the prorata of assured values 
per share do not equal the price at which the stock 
is offered, the difference is at risk. 

Second — After estimating the assured values let 



AND HOW TO JUDGE THEM 217 

all the balance of the proposed investment be for 
unseen ground and taken as a risk. Estimate the 
chances in this risk by considering each column of 
conditions in the larger table and check in each col- 
umn the division which most nearly represents the 
conditions at the mine. Add together the values 
tabulated for each division which may have been 
checked, and divide by ten, the result will be ap- 
proximately the average chances in ten for a profit- 
able investment under the conditions surrounding 
the property which may be under consideration. 

To allow for the risk of loss because of unskilled 
or dishonest management subtract one-half to one 
or even more from the results obtained as the case 
may require. 

Third — If the mine is simply a prospect proceed 
in the same manner, but without allowing for as- 
sured values because of mineral in sight. 

Fourth — Wherever a zero condition is found indi- 
cating circumstances under which it would be an 
impossibility that any returns could be had do not 
make an average of chances, because one zero con- 
dition could not be compensated by other conditions, 
however favorable, and where a zero condition is 
found for a property which may be under consider- 
ation that property should be rejected. 

I. 

Amount of Ore and Associated Minerals in Sight. 

10. Assured. 

Unusually extensive. 
9. Superior. 
Extensive. 



218 MINING INVESTMENTS 

8. Very good. 

Large. 

7. Good. 
Above average. 

6. Fair. 

Rather good. 
5. Passable. 

Fair average. 
4. Poor. 

Rather inferior. 
3. Very poor. 

Inferior. 
2. Bad. 

Small. 
1. Very bad. 

Very small. 
0. Outclassed. 

Tiny bits of no importance. 

II. 

Condition and Extent of Walls, Roofs, Floors or 
Outcropping. 

10. Assured. 

Unusually regular and extensive. Unmistak- 
able evidence of continuity and permanence. 

9. Superior. 

Regular and extensive, good evidences of con- 
tinuity and permanence. 

8. Very good. 

Fairly regular, fairly extensive, with some 
evidences of continuity and permanence. 

7. Good. 

Slightly irregular, fairly extensive, not against 
probable continuity and permanence. 



AND HOW TO JUDGE THEM 219 

6. Fair. 

Irregular, fairly extensive, continuity and 
permanence not indicated, but reasonably 
in expectation. 
5. Passable. 

Irregular, not extensive. Continuity and 
permanence somewhat doubtful. 
4. Poor. 

Decidedly irregular, not extensive, continuity 
and permanence doubtful. 
3. Very poor. 

Broken and irregular, rather small, evidences 
rather against continuity and permanence. 
2. Bad. 

Broken, very irregular and small. Evidences 
against continuity and permanence. 
1. Very bad. 

Very irregular and very small. Evidences 
decidedly against continuity and perma- 
nence. 
0. Outclassed. 

Continuity and permanence demonstrably im- 
possible. 

III. 

Chemical and Physical Conditions of Surrounding 
Formation in Relation to the Mineral Found. 

10. Assured. 

Unusually favorable. Very regular. Broadly 
continuous, demonstrating depth or extent. 
9. Superior. 

Favorable, regular, continuous. Promising 
depth or extent. 



220 MINING INVESTMENTS 

8. Very good. 

Neither favorable or unfavorable. Regular, 
continuous promising depth or extent. 

7. Good. 

Favorable but irregular. Possible change to 
unfavorable. 

6. Fair. 

Favorable but irregular, broken. Might 
change to unfavorable. Some indications 
of faults. 

5. Passable. 

Neither favorable nor unfavorable. Irregular 
broken. May become unfavorable. Some 
faults indicated. 

4. Poor. 

Chemically unfavorable to mineral found, 
but very regular promising depth or broad 
extent of formation. 

3. Very poor. 

Chemically favorable, but very irregular. 
Badly broken, serious faults indicated. 

2. Bad. 

Neither favorable or unfavorable. Very ir- 
regular, badly broken. Serious faults indi- 
cated. 

1. Very bad. 

Unfavorable, very irregular, badly broken. 
Serious faults clearly indicated. 
0. Outclassed. 

Under which the mineral found could not exist 
in merchantable quantities. 



AND HOW TO JUDGE THEM 221 

IV. 

Extent and Distribution of Numeralization Within 



the Deposit. 

10. Assured. 

Unusually regular, even and continuous; de- 
monstrating permanent, very extensive nu- 
meralization. 
9. Superior. 

Regular, continuous, promising permanent ex- 
tensive mineralization. 
8. Very good. 

Continuous, not entirely regular, slight doubts 
as to permanent extensive mineralization. 
7. Good. 

Continuous, somewhat irregular, some por- 
tions might be unprofitable. 
6. Fair. 

Continuous but uneven. Indications that 
some portions would not be profitable. 
5. Passable. 

Not entirely continuous, uneven. Indications 
of some unprofitable zones. 
4. Poor. 

Not continuous, decidedly uneven. Indica- 
tions of unprofitable zones. 
3. Very poor. 

Distribution so irregular, workable only by 
sorting, unprofitable zones. 
2. Bad. 

Very irregular, spotty. Much dead work to 
obtain any good material. 



222 MINING INVESTMENTS 

1. Very bad. 

Spots only. Doubts of sufficient good ma- 
terial to compensate working. 
0. Outclassed. 

Mineralization in small isolated spots where 
demonstrably no profit could be maue. 

V. 

Value of Mineral Found. 



10. Assured. 

Better than the highest commercial grades. 
Profits amply secure beyond possible fluctu- 
ations. 
9. Superior. 

A high commercial grade, margin of profit 
commercially sure. 
8. Very good. 

Commercial grade of fine. Profits secure ex- 
cept during great depression. 
7. Good. 

Commercial grade good, margin of profit se- 
cure under ordinary conditions. 
6. Fair. 

Commercial grade fair, margin of profit sub- 
ject to market fluctuations. 
5. Passable. 

Commercial grade salable. With favorable 
market fair margin of profit. 
4. Poor. 

Sufficient to pay expenses but no profit. 
3. Very poor. 

A loss but not over 33 1-3 per cent. Worked 
in hopes of better development. 



AND HOW TO JUDGE THEM 223 

2. Bad. 

A loss but not over 50 per cent. Worked in 
hopes of better development. 
1. Very bad. 

Loss more than 66 2-3 per cent. Worked on 
speculation for better developments. 
0. Outclassed. 

So low that no profit would be possible. 

VI. 

Composition of Mineral and its Facilities for Treat- 
ment. 
10. Assured. 

Unusually favorable yielding finest results by 
simplest treatment. 
9. Superior. 

Favorable, yielding satisfactory returns by 
ordinary treatment. 
8. Very good. 

Generally favorable. Results a little below 
expectations by ordinary treatment. 
7. Good. 

Slightly complex. Results fairly profitable; 
not entirely satisfactory by ordinary treat- 
ment. 
6. Fair. 

Complex, some profit by ordinary treatment. 
5. Passable. 

Complex. Irregular. A profit by ordinary 
treatment after careful sorting. 
4. Poor. 

Complex, undesirable constituents. Requires 
special treatment before profits can be ex- 
pected. 



224 MINING INVESTMENTS 

3. Very poor. 

Complex, irregular. Undesirable constituents 
make results somewhat doubtful. 
2. Bad. 

Complex, irregular, undesirable constituents 
abundant, grave doubt of successful treat- 
ment. 
1. Very bad. 

Undesirable constituents and conditions very 
prevalent, profits only by successful treat- 
ment can be found. 
0. Outclassed. 

Of such character that no profit could be 

made by any known method. 
VII. 
Natural Supplies Water, Timber, Labor, Etc. 

10. Assured. 

Assuredly abundant at all times at a mini- 
mum cost. 
9. Superior. 

Abundant, easy to obtain, and at a low cost. 
8. Very good. 

Sufficient, not difficult to obtain at ordinary 
cost. 
7. Good. 

Sufficient for ordinary needs during a reason- 
able time. Cost rather above average. 
6. Fair. 

Sufficient with careful management. Cost 
above average. 
5. Passable. 

Rather inferior amounts. Cost decidedly 
above average. 



AND HOW TO JUDGE THEM 225 

4. Poor. 

Inferior, and at a cost to rather tax oper- 
ations. 
3. Very poor. 

Scarce, cost heavy, a serious tax on oper- 
ations. 
2. Bad. 

Deficient, cost a tax on operations sufficient 
to jeopardize results. 
1. Very bad. 

Very deficient. Cost very excessive making 
profits seriously doubtful. 
0. Outclassed. 

So poor and at such cost that no profits 
would be possible. 

VIII. 

Topographical and Physical Conditions. Dangers 
From Excessive Water, Collapses, Poison- 
ous Gases, Etc. 



10. Assured. 

Every facility for mining at a minimum cost 
unusual security against dangers. 
9. Superior. 

Facilities for mining at a low cost. No dan- 
gerous conditions indicated. 
8. Very good. 

No special difficulty or impediment in mining. 
The ordinary dangers only. 
7. Good. 

Slight difficulties to overcome and consequent 
dangers a little above the average. 



226 MINING INVESTMENTS 

6. Fair. 

Engineering difficulties and dangers beyond 
the average, but not at all unsurmountable. 
5. Passable. 

Special engineering to overcome difficulties 
and danger before deposits are available. 
4. Poor. 

Available if special engineering overcomes 
difficulties and dangers. Results somewhat 
doubtful. 
3. Very poor. 

Probably available if special engineering 
overcomes difficulties and dangers. Re- 
sults doubtful. 
2. Bad. 

Questionably available provided special en- 
gineering overcomes difficulties and dangers. 
Chances against successful engineering. 
1. Very bad. 

Possibly available if special engineering over- 
comes difficulties and dangers, but these so 
formidable that results are very doubtful. 
0. Outclassed. 

Engineering dangers, and difficulties which 
demonstrably could not be overcome. . 

IX. 

Political Conditions. 



10. Assured. 

Absolute security under good laws and peace- 
ful tenure of occupancy. 



AND HOW TO JUDGE THEM 227 

9. Superior. 

Good security, good laws, peaceful occupancy; 
only the ordinary disturbances of mining 
camps. 
8. Very good. 

Good laws to back enterprise, but some dan- 
gerous conditions in local surroundings. 

7. Good. 

Laws, judiciary and public order not entirely 
secure, nor yet seriously dangerous. 
6. Fair. 

Such that enterprise must depend somewhat 
on its own strength for security. 

5. Passable. 

Such that enterprise must look well to its own 
strength for security. 

4. Poor. 

Beyond the protection of law, but dangers 
not very seriously threatening. 

3. Very poor. 

Beyond the protection of law, threatening 
dangers require strength to protect interests. 

2. Bad. 

Must expect aggression from surrounding 
dangers, and dishonest officials. 

1. Very bad. 

Grave dangers causing doubts as to mainte- 
nance of enterprise under such surround- 
ings. 

0. Outclassed. 

Dangers and complications so great that no 
enterprise could be maintained. 



228 MINING INVESTMENTS 

X. 

Accessibility. 

10. Assured. 

Every advantage, lowest grade mineral 
salable. General supplies at less than ordi- 
nary quotations. 

9. Superior. 

Without difficulties, all but lowest grade min- 
eral salable, supplies at current quotations. 

8. Very good. 

Without difficulties. Distance prevents sale 
of lower grade minerals. Supplies rather 
expensive. 

7. Good. 

Requiring expenditure of capital before any 
but selected grades salable. Supplies ex- 
pensive. 

6. Fair. 

Requiring expenditures before any but high- 
est grade ores could be sold. 
5. Passable. 

So situated that no ore could be sold. Works 
required for milling or smelting. 
4. Poor. 

Requiring works for treatment with some 
danger that machinery cannot be delivered 
on the property. 
3. Very poor. 

Danger of non-successful delivery of machin- 
ery on the property such as require careful 
consideration. 



AND HOW TO JUDGE THEM 229 

2. Bad. 

Distances and difficulties are such that suc- 
cessful establishment of machinery is doubt- 
ful. 
1. Very bad. 

Such that successful establishment of works 
to utilize mineral is extremely doubtful. 
0. Outclassed. 

Inaccessible, where mineral found could not 
possibly compensate for machinery and im- 
provements. 



Mining Risks Compared With Gambling Hazards. 

Having considered the advantages and disadvan- 
tages of a mining venture, and decided whether one 
should or not take the risk, the fact that money so 
used is at hazard, put out for a great winning or a 
total loss, should be fully realized. Mining risks 
are to some extent similar to gambling chances, with 
the difference that the chances of winning from the 
mines are much more favorable, and furthermore, 
mining is legitimate and honorable, where one suc- 
cess brings prosperity ani employment to thousands 
and returns profits sufficient to compensate for nu- 
merous losses. It must be remembered that great 
returns in mining result principally from cheap 
stocks in undeveloped properties or from exploration 
schemes, provided they are honestly conducted. In 
such ventures, however, the money is at stake for a 
great return or a total loss; hence speculative min- 
ing stocks bear some resemblance to lottery tickets. 

The chances in mining are good, the chances in a 
lottery are almost nil; yet it is a remarkable fact 



230 MINING INVESTMENTS 

that were the sale of lottery tickets permitted they 
would be purchased at par to the value of millions 
of dollars monthly; while mining stocks offering a 
better chance for a great winning, as will be shown 
by the following calculations, are difficult to sell 
even at a big discount. 

Chances by Lottery. 

Scheme of the lottery as usually presented by the 
Spanish-American lotteries. All others have been 
suppressed in America. 

Usually 1,000,000 tickets of $1 each are authorized, 
although there is little mention of the number of 
tickets. The prizes are put forward with great 
prominence. Based on one million tickets a tabu- 
lation of the chances would give results as follows: 

Chances of Winning 

Grand prize $30,000 1 in 1,000,000 

10 prizes of 1,000 1 in 100,000 

20 prizes of . 500 1 in 50,000 

50 prizes of 100 1 in 20,000 

500 prizes of 10 1 in 2,000 

1,000 prizes of 2 1 in 1,000 

3,000 prizes of 1 1 in 333^ 

4,581 prizes. Chances of winning 1 in 218.2 

The chance of winning the capital prize, one in 
1,000,000, is so remote that it is practically no chance 
at all, and the chances of winning $1,000 for $1, one 
in 100,000, are scarcely worth considering; while the 
chance of getting your money back with perhaps a 
prize, one in 218, is so bad that it is not worthy of 
serious consideration. If mining stocks were offered 
on a similar basis they would be simply laughed at, 
yet lottery tickets are eagerly purchased at par, 
many very intelligent people taking a chance on 
them. It is quite possible for a mining stock in a 



AND HOW TO JUDGE THEM 231 

legitimate enterprise not overcapitalized to pay $30,- 
000 for each $1 invested, and the chances of winning 
are better than getting the capital price in a lottery: 
more than this, the chances for substantial returns 
from a mining venture are much better than a lot- 
tery. These facts are logically indicated by the fol- 
lowing statements and estimates: 

It can be claimed in reason and as self evident 
that there are not, and have not been, 1,000,000 min- 
ing enterprises in North and South America com- 
bined, and if it can be shown that one mine out of 
them all has returned $30,000 for one, then the 
chances of receiving such a return are better than 
one in a million. 

The Callao mine in Venezuela formerly had a 
great record, though at one time the stock went 
down to a few cents a share. The mine was to be 
abandoned, but one of the men believed in it, bought 
stock at a few cents a share and worked the prop- 
erty himself. He subsequently uncovered the fabu- 
lous gold deposits, since worked out, but which once 
made the mine so famous that a single share was 
reported to be valued at $53,000. I knew this gentle- 
man. Although he lost heavily in following the de- 
cline of the stock, expecting new deposits to be un- 
covered, at his death, not long since, his estate was 
appraised at $15,000,000, all made out of the Callao 
mine. 

The Alvorado mine, in Mexico, shows how a poor 
peon became a multimillionaire in a few months. 

Comparing the chances for moderate winnings, 
who is there owing a fortune to luck in lottery 
tickets, yet how many thousands have made for- 
tunes in mining! This is demonstration that where 
legitimately conducted the chances of a winning are 



232 MINING INVESTMENTS 

very favorable to the mining venture and very un- 
favorable to the lottery ticket. 

In a lottery the chances of getting you the money 
back with perhaps a premium are as one in 218; on 
the same basis, a chance in 218 mines, the average 
result would be that only one would pay. No one 
would consider such a risk, yet this is precisely the 
proportionate average to be expected in purchasing 
218 tickets in the lottery schemes used as an illus- 
tration. It seems strange that the public is so often 
prejudiced against putting money in mining ven- 
tures even to a moderate extent. Those who have 
mining stocks to sell, or seek to organize private 
mining ventures, are much to blame for the develop- 
ment of this feeling, because they have invariably 
compared mining stocks to investments. Mining 
stocks should not be considered as investments, for 
when compared they make a poor showing; an in- 
vestment presupposes security, and a mining stock 
is a speculation. 

To interest people in mines explain the element 
of risk compared with the chances for a profit and 
let people know what they are buying. A mine can- 
not be considered on an investment basis till the ore 
bodies are proven and the profitable treatment of 
the ore has been accomplished. Stocks in mines rep- 
resenting these conditions sell so high that the 
chances for great winnings are very much reduced 
because the winning has been made, and naturally 
it accrued to those who bought while the mine was 
an untried venture, as all mines are at their opening. 

Proceed with caution in considering mining ven- 
tures, and try your luck in legitimate enterprises, 
risking only what can easily be afforded at hazard. 
Before staking any money, however, investigate, 



AND HOW TO JUDGE THEM 233 

and remember always that an undeveloped mine is 
not an investment but a hazard for a great winning 
or a total loss. Mining is a risk, however, in which 
science, skill and experience can be intelligently ap- 
plied to great benefit; and under such guidance the 
chances for a profit are favorable to the speculation. 
Mining is a speculation, but it is legitimate and 
honorable, and can result in unusual profits to com- 
pensate for the risk. Wherever a mine becomes a 
success it brings prosperity, happiness and steady 
employment to many people, and one such winning 
can compensate for many losses. 



The Art of 
Wall Street Investing 

By JOHN MOODY 

This is a practical Handbook for investors, 
treating the subject of Wall Street Investing 
in a sensible and original manner. It is the 
first modern attempt to cover the subject in 
an attractive and popular form, and in such 
a way as to be of interest to the individual in- 
vestor as well as the more expert banker and 
broker. 

"The book deals in a clear, popular and en- 
tertaining way in the methods, terms and 
phases of Wall Street Investing, giving rules 
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ments, and explaining syndicates and reor- 
ganizations." — The Wall Street Journal. 

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think it ought to find use as a text-book in 
University and College Departments of Eco- 
nomics." — Prof. E. Benjamin Andrews. 

"It is a book of great interest to business 
men and investors in general. Mr. Moody de- 
votes a chapter to 'get-rich-quick schemes,' 
which will be an eye-opener to those s^iileless 
ones who are ready victims of the great army 
of sharpers that infest the land." — Buffalo 
Courier. 

SYNOPSIS OF CHAPTERS. 

I.— Saiety and Security. II.— Bonds and What They 
Represent. III.— Stocks and What They Are. IV— Ana- 
lyzing Railroad Securities. V. — Industrials and Tractions. 
VI.— Investments vs. Speculation. VII. — "Get-Rich-Quick" 
Schemes. VIII. — Reorganizations and Syndicates. IX.— 
The New York Stock Exchange. X.— Wall Street Phrases 
and Methods. 

The volume is handsomely printed and hound in red cloth, being 
uniform in size with " The Pitfalls of Speculation." Price per copy, 
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The Pitfalls of Speculation 

By THOMAS GIBSON 

This book deals exclusively with marginal 
speculation and analyzes in a clear and simple 
manner the causes of failure in speculation, 
with a suggestion as to the remedies. While 
80 per cent, of the public speculators fail in 
their ventures, the writer contends that the 
errors may be corrected and the pitfalls 
avoided by careful study and clear understand- 
ing of the machinery of the exchanges. 

In the introduction the writer says: 

" I do not pretend that any "prescription" can be 
written to insure success nor that a majority of the 
public traders will ever succeed, but I do maintain 
that many individuals capable of clear reasoning 
and the directed exercise of such reasoning, are sim- 
ply moving in the dark thru a lack of understanding 
as to what makes and breaks prices. More fallacies 
superstitions and distorted logic are connected with 
speculation than with any other business on earth." 

Until the late Charles H. Dow, the founder 
of "The Wall Street Journal," began to write 
of such matters there was no literature extant 
on the art of speculation with especial refer- 
ence to the position of the speculator of mod- 
erate means. Mr. Dow's efforts were news- 
paper articles, not intended for book publica- 
tion. Since Mr. Dow, no writer has appeared 
to treat of these matters with anything ap- 
proaching the knowledge of the subject, the 
breadth of view and the common-sense treat- 
ment that Mr. Gibson devotes to it. 

SYNOPSIS OF CHAPTERS. 

I.— Introduction. II.— Ignorance, Over Speculation, etc. 
III.— Manipulation, IV.— Accidents. V.— Business Methods 
in Speculation. VI.— Market Technicalities. VII.— Tips. 
VIII.— Mechanical Speculation. IX.— Short Selling. X — 
"What 500 Speculative Accounts Showed. XI.— Grain Specu- 
lation. XII.— Suggestions as to Intelligent Methods. XIII — 
Conclusion. 

The volume is handsomely printed and hound in green cloth, being 
uniform in size roith " The Art of Wall Street Investing." Price, 
per copy, $1.00 net. By mail, $1.10. 

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Smith's Financial Dictionary is adapted not 
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It is an entirely new work, consisting of 543 
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This is a work designed for the Investment 
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The Cyeles of Speculation 

By THOMAS GIBSON 

Author "Pitfalls of Speculation " 

This work is framed with the intention of entering a 
little further into the great question of Speculation and 
Investment than did the "Pitfalls of Speculation," by 
the same author. 

The introduction discusses briefly the difference between 
mechanical gambling and marginal speculation and shows 
wherein the difference lies. The folly of expecting sudden 
riches from even successful speculative operations is also 
dealt with. 

The second chapter gives a brief history of the great 
speculative movements of the last century and analyses 
the causes of such movements. 

In the third and fourth chapters the important questions 
of our increasing supply of gold and the influences of 
money conditions on prices are covered. These two sub- 
jects are considered particularly for their bearing on price 
changes in Bonds, Stocks and Commodities. 

In the fifth chapter such factors as politics, crops, etc., 
are discussed. 

In the second part of the work, Mr. Gibson has taken 
up subjects that are not clearly understood by the laity. 
The somewhat involved methods of operating on Puts and 
Calls is explained in a manner which robs the subject of 
all its complexity. The question of dividends; their in- 
fluence on prices immediately before or after a disburse- 
ment, is fully and logically explained. 

Other subjects briefly treated are: Basing Eailroad 
Values; The Effects of Business Depression; Undigested 
Securities; The Value of Rights; A Barometer of Aver- 
ages; The Best Method of Trading; Indications of Crises; 
The Ordinary Swing of Prices; The Factor of Safety; 
Borrowing and Lending Stocks; Scalping; Crop Damage; 
The Selection of Securities; The Bank. Statement, etc. 

The conclusion is particularly interesting to the Specu- 
lator. In this chapter Mr. Gibson takes up and answers 
the following questions most frequently asked by specu- 
lators: 

1. What margins are necessary to reasonable safety? 

2. Is it better to study the entire list or make a specialty 
of one stock? 

3. What class of securities is the safest? 

4. What may be considered a fair rally or reaction in 
prices? 

5. What is the best general method of trading? 

This volume is uniform with the same author's "Pitfalls 
of Speculation," and also with the other volumes of "The 
Investor's Library." 

Price, per copy, $1.50 net ; by mail, $1.62 
Published by 

THE MOODY CORPORATION 

35 NASSAU STREET - - - NEW YORK 



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